The distribution phase is the third stage of the cycle and it is where the bears are attempting to regain authority over the market The price action on this chart at this stage is flat. One indication that the market is in the distribution phase will be the sustained failure of price to create higher lows/bottoms on the chart. The price action begins to create Lower tops which is a sign that the market is experiencing a sell off
When trading stocks during this phase the composite operators are selling the shares they own.
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