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Wyckoffaccumulation

UPl | Wyckoff Events & Phases Explained Wyckoff developed a price action market theory which is still a leading principle in today's trading practice. The Wyckoff method states that the price cycle of a traded instrument consists of 4 stages – Accumulation, Markup, Distribution, and MarkDown. 👉TEXTBOOK EXAMPLE Accumulation Schematic: Wyckoff Events and Phases👈 Price Action Analysis And this is the accumulation stage - 1) PS— Preliminary Support, where substantial buying begins to provide pronounced support after a continued down-move. - Volume increases and price spread widens, signaling that the down-move may be approaching its end. 2) SC—Selling Climax, the point at which widening spread and selling pressure usually in high point and heavy or panicky selling by the public is being absorbed by larger professional interests at or near a bottom. - Often price will close well off the low in an SC, reflecting the buying by these large interests. 3) AR—Automatic Rally, which occurs because intense selling pressure has greatly decline. - A wave of buying easily pushes prices up. - The high of this rally will help define the upper boundary of an accumulation. 4) ST—Secondary Test, in which price revisits the area of the SC to test the supply/demand. - If a bottom is to be confirmed, volume and price spread should be decline as the market approaches support in the area of the SC. - It is common to have multiple STs after an SC. 5) SOS—Sign Of Strength, a price advance on increasing spread and relatively higher volume. 6) LPS—Last Point Of Support, the low point of a reaction or pullback after an SOS. 7) BU/LPS- Backing up to an LPS means a pullback to support that was formerly resistant, on diminished spread and volume. All the phases of accumulation stage- Phase A: Phase A marks the stopping of the prior downtrend. -- Up to this point, supply has been dominant. -- The approaching cutback of supply is evidenced in preliminary support (PS) and a selling climax (SC). -- A successful secondary test (ST) in the area of the SC will show less selling than previously and a narrowing of spread and decreased volume, generally stopping at or above the same price level as the SC. -- If the ST goes lower than that of the SC, one can anticipate either new lows or prolonged consolidation. -- Horizontal lines may be drawn to help focus attention on market behavior, as seen in the two Accumulation Schematics above. Phase B: -- Phase B serves the function of “building a cause” for a new uptrend -- In Phase B, institutions and large professional interests are accumulating relatively low-priced inventory in anticipation of the next markup. --There are usually multiple STs during Phase B' -- Institutional buying and selling impart the characteristic up-and-down price action of the trading range. --Early on in Phase B, the price swings tend to be wide and accompanied by high volume. Phase C: -- It is in Phase C that the stock price goes through a final test of the remaining supply. -- this marks the beginning of a new uptrend, trapping the late sellers (bears). -- It indicates that the stock is likely to be ready to move up, so this is a good time to initiate at least a partial long position. -- The appearance of an SOS shortly after a spring or shakeout validates the analysis. Phase D: --During Phase D, the price will move at least to the top --LPSs in this phase are generally excellent places to initiate or add to profitable long positions. Phase E: --large operators can occur at any point in Phase E. --These are sometimes called “stepping stones” on the way to even higher price targets. -------------------------------------------------- Regards, Revive Traders ------------------------------------------------ Guys check out the related POST as well, it went FANTASTIC ! 🙏FOLLOW for more ! 👍LIKE if U find it useful ! ✍COMMENT your views & feedback !
NSE:UPLEducation
by ReviveTraders
Wyckoff Accumulation & DistributionThe Wyckoff Method, pioneered by Richard Wyckoff, a prominent figure in the early 1900s stock market, remains a powerful technical analysis-based trading approach. This article delves into the intricacies of the Wyckoff Accumulation and Distribution phases, fundamental to this method. Who was Richard Wyckoff? Richard Wyckoff, a highly successful American stock market investor of his time, stands as a pioneer in technical analysis. He transitioned from accumulating personal wealth to addressing what he perceived as market injustices, devising the Wyckoff Method to empower traders against market manipulation. Through various platforms like his own Magazine of Wall Street and Stock Market Technique, Wyckoff disseminated his insights. The Wyckoff Method: Wyckoff proposed that markets undergo distinct phases: Accumulation and Distribution. These phases guide traders on when to accumulate or distribute their positions, forming the core of the method. The Wyckoff Accumulation Phase: This phase materializes as a sideways, range-bound period subsequent to a prolonged downtrend. During this stage, significant players seek to establish positions without causing dramatic price drops. The accumulation phase comprises six integral components, each serving a vital role: Preliminary Support (PS): As signs of the downtrend ending emerge, high volume and wider spreads surface. Buyers initiate interest, suggesting the end of selling dominance. Selling Climax (SC): Characterized by intense selling pressure and panic selling, this phase represents a sharp price decline. Often, price closes well above the lowest point. Automatic Rally (AR): Late sellers experience a reversal, driven by short sellers covering positions. This phase sets the upper range limit for subsequent consolidation. Secondary Test (ST): Controlled retesting of lows with minimal volume increase indicates potential reversal. Spring: A deceptive move resembling a downtrend resumption, designed to deceive and shakeout participants. Last Point of Support, Back Up, and Sign of Strength (LPS, BU, SOS): Clear shifts in price action mark the transition into the range's start. A rapid, one-sided move signifies buyer control, often following the spring. Wyckoff Distribution Cycle: Following Accumulation, the Wyckoff Distribution phase unfolds. This cycle consists of five phases: Preliminary Supply (PSY): Dominant traders initiate selling after a notable price rise, leading to increased trading volume. Buying Climax (BC): Retail traders enter positions, driving further price increase. Dominant traders capitalize on premium prices to sell. Automatic Reaction (AR): The end of the BC phase brings a price drop due to decreased buying. High supply causes a decline to the AR level. Secondary Test (ST): Price retests the BC range, assessing supply and demand balance. Sign of Weakness, Last Point of Supply, Upthrust After Distribution (SOW, LPSY, UTAD): SOW signals price weakness, LPSY tests support, and UTAD might occur near cycle's end, pushing the upper boundary. Wyckoff Reaccumulation and Redistribution Cycles: Reaccumulation occurs during uptrends, as dominant traders accumulate shares during price pauses. Redistribution, during downtrends, begins with sharp price rallies as short sellers capitalize. Dominant traders strategically enter positions during these rallies. Wyckoff's Foundational Concepts: Law of Supply and Demand: Prices rise when demand is high and supply is low. Prices fall when supply is high and demand is low. Balanced supply and demand lead to stable prices. Law of Cause and Effect: Price changes are driven by specific underlying factors. Price rises result from accumulation phases, while drops arise from distribution phases. Law of Effort vs. Result: Trading volume should match price movement. Deviations signal potential shifts in market sentiment or upcoming opportunities. The Wyckoff Method is relevant to all markets, including cryptocurrencies like Bitcoin, where supply and demand play a crucial role in influencing price movements.
CRYPTOCAP:TOTALEducation
by Vestinda
1
How Wyckoff & Elliot Wave Theory applied togetherMaybe this near "full-stack" technical analysis using Wyckoff and Elliot Theory along with relevant indicators such as Moving Average and Cumulative Volume Delta (CVD) will puzzled some of the traders who used to have a simpler analysis on the market. But to those who curious this is something that is really interesting to know. The chart above is showing us how the two theories can be complementary to each other. Lets analyze the chart above of BTC/USD in 4h timeframe from left to right comprehensively based on the Wyckoff phases of the 2nd accumulation model. Phase A: During the early November of 2022, BTC was under heavy sell-off after Binance dumping hard on FTX where the price crossunder 200 EMA and 100 SMA. The waterfall crash of BTC was printing a 5-wave of zigzag wave. We can see that the lowest point of wave 3 shows the highest selling volume in a single 4h HA candle and also act as Preliminary Support (PS) where then I put the 1st support line there. The sell-off continue to form the last zigzag wave where we can see multiple high selling volume bars and made a very deep negative cumulative volume delta in which it represents as Selling Climax (SC) in Wyckoff. A massive buying then occurred which immediately push the price back up to the wave 4 of zigzag wave area, which in Wyckoff we can name it as Automatic Rally (AR). By using these to extreme high of AR and low of SC we can draw a rectangle to have a better view on the consolidation area. After the dramatic push and pull of price, the market volume gradually decreasing followed by price having a contracting highs and lows, forming a classic contracting triangle, where we can see some of the lows are respecting the 2nd support line. Phase B: The end of contracting triangle followed by another zigzag wave of smaller degree, where it breaks the 2nd support line and creating the second lowest low which we can name it as Secondary Test (ST) that the selling volume is much smaller hence also creating a shallower negative CVD. Price then go up back to the 2nd support line and able to reach back to 100 SMA although still not able to candle close it on the first attempt but eventually able to close it on the second attempt. Price then going on a small rally creating an ascending channel of 5-wave leading diagonal and able to close above the 1st support line, the 200 EMA and even able to make a higher high. But the volume is still not enough to make a change of character breakout. Phase C: The mini rally is identified as the 1st wave of primary impulsive wave, so the reactionary move where the price breaking down the ascending channel, the 1st support line, 200 EMA and 100 SMA and going back down to the 2nd support line can be identified as wave 2. Most of phase C volume going under the Volume Mean Level, it is the lowest volume of all of the phases. Combination of multiple minor corrective waves creating a WXY wave and we can see the 2nd support line is holding the price quite well where it represents as Last Point of Support (LPS). Phase D: The volume and price gradually moving up and able to close above 100 SMA and 200 EMA, then going higher to 1st support line with higher volume to a point of Show of Strength (SOS) where a change of character breakout is formed and also breaking out from the box or the whole Trending Range. Phase D is the perfect time to make an entry. The identifying of the first two waves of an impulsive move also creating a high confidence that we are entering the wave 3 or we can also call it as the money wave. Phase E: Just enjoy the rally This whole chart actually representing a very textbook Wyckoff Theory of the 2nd Accumulation Model and we can also see in this chart the transition between corrective wave and motive wave of Elliot Wave Theory. In Phase A and the early Phase B, the corrective wave is on its end, where the rest of the Phase B to E we can see how the scaffoldings of early structure of an impulsive move is constructed. making a consolidating of accumulation before going a strong trending move. Wyckoff explains this transition of corrective wave to a motive wave in a beautiful way and surely we can also use it on the transition of motive wave to a corrective wave using the distribution model. This is just one variation where we can use Elliot and Wyckoff hand in hand in order to have a much better technical analysis on the market and maybe this combined analysis that I made on the above chart could be the best scenario to apply for both theories. Hopefully this helps to educate for anyone of you who read this post, thank you
INDEX:BTCUSDEducation
by derahmanov
ILMN - Wyckoff AccumulationJust thought I would share that ILMN appears to align with Wyckoff Accumulation patterns as it began to form a complex base from June last year. The 200 day moving average is now begining to flatten out with the stock making a few attempts to rise above it since this year. For those with patience, any dips in the coming days will be an opportunity to accumulate. However momentum traders will prefer to see a break above it's horizontal resistence @ 249 to initiate Longs. You can read more about Wyckoff pattern here. school.stockcharts.com Disclaimer: Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is important! Take care and Good Luck!
NASDAQ:ILMNEducation
by Juliac
16
📊 Wyckoff SchematicsThe Wyckoff Method involves a five-step approach to stock selection and trade entry, which can be summarized as follows: Determine the present position and probable future trend of the market. Is the market consolidating or trending? Does your analysis of market structure, supply and demand indicate the direction that is likely in the near future? This assessment should help you decide whether to be in the market at all and, if so, whether to take long or short positions. Use both bar charts and Point and Figure charts of the major market indices for Step 1. Select stocks in harmony with the trend. In an uptrend, select stocks that are stronger than the market. For instance, look for stocks that demonstrate greater percentage increases than the market during rallies and smaller decreases during reactions. In a downtrend, do the reverse – choose stocks that are weaker than the market. If you are not sure about a specific issue, drop it and move on to the next one. Use bar charts of individual stocks to compare with those of the most relevant market index for Step 2. Select stocks with a “cause” that equals or exceeds your minimum objective. A critical component of Wyckoff's trade selection and management was his unique method of identifying price targets using Point and Figure (P&F) projections for both long and short trades. In Wyckoff's fundamental law of “Cause and Effect,” the horizontal P&F count within a trading range represents the cause, while the subsequent price movement represents the effect. Therefore, if you are planning to take long positions, choose stocks that are under accumulation or re-accumulation and have built a sufficient cause to satisfy your objective. Step 3 relies on the use of Point and Figure charts of individual stocks. Determine the stocks' readiness to move. Apply the nine tests for buying or for selling (described below). For instance, in a trading range after a prolonged rally, does the evidence from the nine selling tests suggest that significant supply is entering the market and that a short position may be warranted? Or in an apparent accumulation trading range, do the nine buying tests indicate that supply has been successfully absorbed, as evidenced further by a low-volume spring and an even lower-volume test of that spring? Use bar charts and Point and Figure charts of individual stocks for Step 4. Time your commitment with a turn in the stock market index. Three-quarters or more of individual issues move in harmony with the general market, so you improve the odds of a successful trade by having the power of the overall market behind it. Specific Wyckoff principles help you anticipate potential market turns, including a change of character of price action (such as the largest down-bar on the highest volume after a long uptrend), as well as manifestations of Wyckoff's three laws (see below). Put your stop-loss in place and then trail it, as appropriate, until you close out the position. Use bar and Point and Figure charts for Step 5. 🔹PS — preliminary support, where substantial buying begins to provide pronounced support after a prolonged down-move. Volume increases and price spread widens, signaling that the down-move may be approaching its end. 🔹SC — selling climax, the point at which widening spread and selling pressure usually climaxes and heavy or panicky selling by the public is being absorbed by larger professional interests at or near a bottom. Often price will close well off the low in a SC, reflecting the buying by these large interests. 🔹AR — automatic rally, which occurs because intense selling pressure has greatly diminished. A wave of buying easily pushes prices up; this is further fueled by short covering. The high of this rally will help define the upper boundary of an accumulation TR. 🔹ST — secondary test, in which price revisits the area of the SC to test the supply/demand balance at these levels. If a bottom is to be confirmed, volume and price spread should be significantly diminished as the market approaches support in the area of the SC. It is common to have multiple STs after a SC. 🔹Test — Large operators always test the market for supply throughout a TR (e.g., STs and springs) and at key points during a price advance. If considerable supply emerges on a test, the market is often not ready to be marked up. A spring is often followed by one or more tests; a successful test (indicating that further price increases will follow) typically makes a higher low on lesser volume. 🔹SOS — sign of strength, a price advance on increasing spread and relatively higher volume. Often a SOS takes place after a spring, validating the analyst’s interpretation of that prior action. 🔹LPS — last point of support, the low point of a reaction or pullback after a SOS. Backing up to an LPS means a pullback to support that was formerly resistance, on diminished spread and volume. On some charts, there may be more than one LPS, despite the ostensibly singular precision of this term. 🔹BU — “back-up”. This term is short-hand for a colorful metaphor coined by Robert Evans, one of the leading teachers of the Wyckoff method from the 1930s to the 1960s. Evans analogized the SOS to a “jump across the creek” of price resistance, and the “back up to the creek” represented both short-term profit-taking and a test for additional supply around the area of resistance. A back-up is a common structural element preceding a more substantial price mark-up, and can take on a variety of forms, including a simple pullback or a new TR at a higher level. 🔹PSY — preliminary supply , where large interests begin to unload shares in quantity after a pronounced up-move. Volume expands and price spread widens, signaling that a change in trend may be approaching. 🔹BC — buying climax, during which there are often marked increases in volume and price spread. The force of buying reaches a climax, with heavy or urgent buying by the public being filled by professional interests at prices near a top. A BC often coincides with a great earnings report or other good news, since the large operators require huge demand from the public to sell their shares without depressing the stock price. 🔹AR — automatic reaction. With intense buying substantially diminished after the BC and heavy supply continuing, an AR takes place. The low of this selloff helps define the lower boundary of the distribution TR. 🔹ST — secondary test, in which price revisits the area of the BC to test the demand/supply balance at these price levels. For a top to be confirmed, supply must outweigh demand; volume and spread should thus decrease as price approaches the resistance area of the BC. An ST may take the form of an upthrust (UT), in which price moves above the resistance represented by the BC and possibly other STs before quickly reversing to close below resistance. After a UT, price often tests the lower boundary of the TR. 🔹SOW — sign of weakness, observable as a down-move to (or slightly past) the lower boundary of the TR, usually occurring on increased spread and volume. The AR and the initial SOW(s) indicate a change of character in the price action of the stock: supply is now dominant. 🔹LPSY — last point of supply. After testing support on a SOW, a feeble rally on narrow spread shows that the market is having considerable difficulty advancing. This inability to rally may be due to weak demand, substantial supply or both. LPSYs represent exhaustion of demand and the last waves of large operators’ distribution before markdown begins in earnest. 🔹UTAD — upthrust after distribution. A UTAD is the distributional counterpart to the spring and terminal shakeout in the accumulation TR. It occurs in the latter stages of the TR and provides a definitive test of new demand after a breakout above TR resistance. Analogous to springs and shakeouts, a UTAD is not a required structural element: the TR in Distribution Schematic #1 contains a UTAD, while the TR in Distribution Schematic #2 does not. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
3
wyckoff Accumulation 1 can apply on any timeframe PS—preliminary support, where substantial buying begins to provide pronounced support after a prolonged down-move. Volume increases and price spread widens, signaling that the down-move may be approaching its end. SC—selling climax, the point at which widening spread and selling pressure usually climaxes and heavy or panicky selling by the public is being absorbed by larger professional interests at or near a bottom. Often price will close well off the low in a SC, reflecting the buying by these large interests. AR—automatic rally, which occurs because intense selling pressure has greatly diminished. A wave of buying easily pushes prices up; this is further fueled by short covering. The high of this rally will help define the upper boundary of an accumulation TR. ST—secondary test, in which price revisits the area of the SC to test the supply/demand balance at these levels. If a bottom is to be confirmed, volume and price spread should be significantly diminished as the market approaches support in the area of the SC. It is common to have multiple STs after a SC. Note: Springs or shakeouts usually occur late within a TR and allow the stock’s dominant players to make a definitive test of available supply before a markup campaign unfolds. A “spring” takes price below the low of the TR and then reverses to close within the TR; this action allows large interests to mislead the public about the future trend direction and to acquire additional shares at bargain prices. A terminal shakeout at the end of an accumulation TR is like a spring on steroids. Shakeouts may also occur once a price advance has started, with rapid downward movement intended to induce retail traders and investors in long positions to sell their shares to large operators. However, springs and terminal shakeouts are not required elements: Accumulation Schematic 1 depicts a spring, while Accumulation Schematic 2 shows a TR without a spring. Test—Large operators always test the market for supply throughout a TR (e.g., STs and springs) and at key points during a price advance. If considerable supply emerges on a test, the market is often not ready to be marked up. A spring is often followed by one or more tests; a successful test (indicating that further price increases will follow) typically makes a higher low on lesser volume. SOS—sign of strength, a price advance on increasing spread and relatively higher volume. Often a SOS takes place after a spring, validating the analyst’s interpretation of that prior action. LPS—last point of support, the low point of a reaction or pullback after a SOS. Backing up to an LPS means a pullback to support that was formerly resistance, on diminished spread and volume. On some charts, there may be more than one LPS, despite the ostensibly singular precision of this term. BU—“back-up”. This term is short-hand for a colorful metaphor coined by Robert Evans, one of the leading teachers of the Wyckoff method from the 1930s to the 1960s. Evans analogized the SOS to a “jump across the creek” of price resistance, and the “back up to the creek” represented both short-term profit-taking and a test for additional supply around the area of resistance. A back-up is a common structural element preceding a more substantial price mark-up, and can take on a variety of forms, including a simple pullback or a new TR at a higher level
Education
by BasharatAliMaher
Wyckoff Accumulation Schematics 2Phase A: Phase A marks the stopping of the prior downtrend. Up to this point, supply has been dominant. The approaching diminution of supply is evidenced in preliminary support (PS) and a selling climax (SC). These events are often very obvious on bar charts, where widening spread and heavy volume depict the transfer of huge numbers of shares from the public to large professional interests. Once these intense selling pressures have been relieved, an automatic rally (AR), consisting of both institutional demand for shares as well as short-covering, typically ensues. A successful secondary test (ST) in the area of the SC will show less selling than previously and a narrowing of spread and decreased volume, generally stopping at or above the same price level as the SC. If the ST goes lower than that of the SC, one can anticipate either new lows or prolonged consolidation. The lows of the SC and the ST and the high of the AR set the boundaries of the TR. Horizontal lines may be drawn to help focus attention on market behavior, as seen in the two Accumulation Schematics above. Sometimes the downtrend may end less dramatically, without climactic price and volume action. In general, however, it is preferable to see the PS, SC, AR and ST, as these provide not only a more distinct charting landscape but a clear indication that large operators have definitively initiated accumulation. In a re-accumulation TR (which occurs during a longer-term uptrend), the points representing PS, SC and ST are not evident in Phase A. Rather, in such cases, Phase A resembles that more typically seen in distribution (see below). Phases B-E generally have a shorter duration and smaller amplitude than, but are ultimately similar to, those in the primary accumulation base. Phase B: In Wyckoffian analysis, Phase B serves the function of “building a cause” for a new uptrend (see Wyckoff Law #2 – “Cause and Effect”). In Phase B, institutions and large professional interests are accumulating relatively low-priced inventory in anticipation of the next markup. The process of institutional accumulation may take a long time (sometimes a year or more) and involves purchasing shares at lower prices and checking advances in price with short sales. There are usually multiple STs during Phase B, as well as upthrust-type actions at the upper end of the TR. Overall, the large interests are net buyers of shares as the TR evolves, with the goal of acquiring as much of the remaining floating supply as possible. Institutional buying and selling imparts the characteristic up-and-down price action of the trading range. Early on in Phase B, the price swings tend to be wide and accompanied by high volume. As the professionals absorb the supply, however, the volume on downswings within the TR tends to diminish. When it appears that supply is likely to have been exhausted, the stock is ready for Phase C. Phase C: It is in Phase C that the stock price goes through a decisive test of the remaining supply, allowing the “smart money” operators to ascertain whether the stock is ready to be marked up. As noted above, a spring is a price move below the support level of the TR (established in Phases A and B) that quickly reverses and moves back into the TR. It is an example of a bear trap because the drop below support appears to signal resumption of the downtrend. In reality, though, this marks the beginning of a new uptrend, trapping the late sellers (bears). In Wyckoff's method, a successful test of supply represented by a spring (or a shakeout) provides a high-probability trading opportunity. A low-volume spring (or a low-volume test of a shakeout) indicates that the stock is likely to be ready to move up, so this is a good time to initiate at least a partial long position. The appearance of a SOS shortly after a spring or shakeout validates the analysis. As noted in Accumulation Schematic #2, however, the testing of supply can occur higher up in the TR without a spring or shakeout; when this occurs, the identification of Phase C can be challenging. Phase D: If we are correct in our analysis, what should follow is the consistent dominance of demand over supply. This is evidenced by a pattern of advances (SOSs) on widening price spreads and increasing volume, as well as reactions (LPSs) on smaller spreads and diminished volumes. During Phase D, the price will move at least to the top of the TR. LPSs in this phase are generally excellent places to initiate or add to profitable long positions. Phase E: In Phase E, the stock leaves the TR, demand is in full control and the markup is obvious to everyone. Setbacks, such as shakeouts and more typical reactions, are usually short-lived. New, higher-level TRs comprising both profit-taking and acquisition of additional shares (“re-accumulation”) by large operators can occur at any point in Phase E. These TRs are sometimes called “stepping stones” on the way to even higher price targets.
HEducation
by BasharatAliMaher
Wyckoff Accumulation Schematics 1PS—preliminary support, where substantial buying begins to provide pronounced support after a prolonged down-move. Volume increases and price spread widens, signaling that the down-move may be approaching its end. SC—selling climax, the point at which widening spread and selling pressure usually climaxes and heavy or panicky selling by the public is being absorbed by larger professional interests at or near a bottom. Often price will close well off the low in a SC, reflecting the buying by these large interests. AR—automatic rally, which occurs because intense selling pressure has greatly diminished. A wave of buying easily pushes prices up; this is further fueled by short covering. The high of this rally will help define the upper boundary of an accumulation TR. ST—secondary test, in which price revisits the area of the SC to test the supply/demand balance at these levels. If a bottom is to be confirmed, volume and price spread should be significantly diminished as the market approaches support in the area of the SC. It is common to have multiple STs after a SC. Note: Springs or shakeouts usually occur late within a TR and allow the stock’s dominant players to make a definitive test of available supply before a markup campaign unfolds. A “spring” takes price below the low of the TR and then reverses to close within the TR; this action allows large interests to mislead the public about the future trend direction and to acquire additional shares at bargain prices. A terminal shakeout at the end of an accumulation TR is like a spring on steroids. Shakeouts may also occur once a price advance has started, with rapid downward movement intended to induce retail traders and investors in long positions to sell their shares to large operators. However, springs and terminal shakeouts are not required elements: Accumulation Schematic 1 depicts a spring, while Accumulation Schematic 2 shows a TR without a spring. Test—Large operators always test the market for supply throughout a TR (e.g., STs and springs) and at key points during a price advance. If considerable supply emerges on a test, the market is often not ready to be marked up. A spring is often followed by one or more tests; a successful test (indicating that further price increases will follow) typically makes a higher low on lesser volume. SOS—sign of strength, a price advance on increasing spread and relatively higher volume. Often a SOS takes place after a spring, validating the analyst’s interpretation of that prior action. LPS—last point of support, the low point of a reaction or pullback after a SOS. Backing up to an LPS means a pullback to support that was formerly resistance, on diminished spread and volume. On some charts, there may be more than one LPS, despite the ostensibly singular precision of this term. BU—“back-up”. This term is short-hand for a colorful metaphor coined by Robert Evans, one of the leading teachers of the Wyckoff method from the 1930s to the 1960s. Evans analogized the SOS to a “jump across the creek” of price resistance, and the “back up to the creek” represented both short-term profit-taking and a test for additional supply around the area of resistance. A back-up is a common structural element preceding a more substantial price mark-up, and can take on a variety of forms, including a simple pullback or a new TR at a higher level.
Education
by BasharatAliMaher
Wyckoff Phases in PracticeWe all know that market moves in Phases. The four most popular phases are – 1️⃣Accumulation 2️⃣Markup 3️⃣Distribution and 4️⃣Markdown Mr. Wyckoff analyzed these phases further, esp . Accumulation and Distribution, to understand the price behavior for potential opportunities to trade/invest in the market. In this tutorial I am going to have a brief discussion about Accumulation-sub-phases of the market with the help of an example that I came across today. ✅Phase A 🚩This phase is preceded by a major downtrend. 🚩Begins with a selling climax ( SC ) - Large down bars with abnormally high volume (see B). 🚩SC is followed by the largest rally in the major downtrend, associated with good buying volume . This Automatic Rally (AR) represents the change in character (ChoC) of the market - buyers taking over. 🚩Market retest the level B with a lower volume (supply) – Secondary Test (see D). ✅Phase B 🚩Usually the longest phase. 🚩Higher volume during rallies (eg. E) and lesser during retracements. 🚩Even if volume is high during retracements, price fails to make new lows. 🚩More secondary tests (see F) held at the support zone (B and D). 🚩Market consolidates testing supply and demand with no particular direction – Consolidation. ✅Phase C 🚩This phase is the smallest but the most important. 🚩Usually ends with a Spring (not in the above case). 🚩You would often see final shakeout of weak buyers in this phase. Price would dip underneath the support zone (B, D and F) and reverse sharply back above support. 🚩Perhaps the best time to enter for those who like to take low risk high probability trades. 🚩In the above case, point G was just another test of support Zone. ✅Phase D 🚩You would see swift action in this phase. Wide up bars (with high volume ) and small down bars (with low volume ) -Sign of Strength. 🚩This also represents the change in character, which now differs from the consolidation phase. 🚩ChoCh - Notice two blue rectangles and the price action in them. The action differs vehemently from the previous phases - wide bars with ease of movement. 🚩Price breaks the resistance zone (in most cases resistance would be the high of automatic rally). 🚩It again retests (after breakout) this resistance which now starts acting as support. This is called the Backup action. 🚩Further (re)accumulation can be seen here in many cases. 🚩This is perhaps the best time for those who like to enter after confirmation (A higher high; break of resistance; price jumping outside the range) ✅Phase E 🚀Accumulation is over and a trend is established - Markup phase Not all bear markets end up with these accumulation-sub-phases. You may often see V-shaped recoveries just like what we experienced after March 2020 lows. But you will surely find some stocks or markets that moved in line with Wyckoff phases. Thanks for reading. Do like and comment. 📣Disclaimer: The views are personal only. Apply your own due diligence before making your investment decisions.
NSE:MCXEducation
by Bravetotrade
3
Wyckoff trading using the example of ADA/BTC Accumulation schemePay attention to the phases and letter designations on the graph that I showed on the ADA / BTC pair. (Cardano). A diagram of the accumulation phases is shown. Which are relevant for trading now. Several trading methods are combined on the chart: 1) Trading by the Wyckoff method. 2) Trade in horizontal channels. 3) Trade from important areas (price reversal points). 4) Trading in secondary local trends. Now the price is at the important zone of the mirror level which, from the development of the situation, can act as support or resistance. Channel pitch 30%. You can work in two directions. _________________________________ About Wyckoff's trading method. The forerunner of volume analysis (VSA) is Richard Wyckoff. Roughly speaking, the whole point of the method can be expressed - trade for a major market player. The creator of this technique himself was a man who had a system-forming influence on stock trading. It was not a poor theorist who got rich after publishing books! He was a very successful trader and earned impressive capital in his day. The very method that he was allowed to achieve and the entire 40 years of experience in trading, he published in his book in the public domain is already closer to his death Wall Street Ventures and Adventures Through Forty Years. At the end of his life's journey, Wyckoff became more altruistic, and decided to share the knowledge that led him to wealth. He died in 1934. The Wyckoff trading method was developed in the early 1930s. It consists of a number of principles and strategies originally developed for traders and investors. Wyckoff devoted much of his life experience to studying market behavior, and his work still has an impact on much of modern technical analysis (TA). Currently, the Wyckoff method is applied to all types of financial markets, although initially it was focused only on stocks. During the creation of his work, Wyckoff was inspired by the trading methods of other successful traders (especially Jesse Livermore). Today, he enjoys the same respect as other key figures such as Charles Dow and Ralph Nelson Elliott. But for example, unlike Elliot’s theory, which is good in theory, but not always applicable in practice, the Wyckoff method is many times more effective for making money not in theory, but in practice. _________________________________________ According to Richard Wyckoff's trading method, there are 3 laws: 1) The law of supply and demand. 2) The law of causation. 3) The law of communication efforts and results. The first law states that the value of assets begins to rise when demand exceeds supply, and accordingly falls in the reverse order. This is one of the most basic principles in the financial markets, which does not exclude Wyckoff in his work. We can represent the first law in the form of three simple equations: 1) Demand> supply = price increases. 2) Demand <offer = price falls. 3) Demand = supply = no significant price change (low volatility). The second law states that the differences between supply and demand are not a coincidence. Instead, they reflect preparatory actions resulting from certain events. In Wyckoff's terminology, the accumulation period (cause) ultimately leads to an uptrend (consequence). In turn, the distribution period (cause) provokes the development of a downtrend (consequence). Wyckoff’s third law states that price changes are the result of common efforts that are displayed on the trading volume. In the case when the growth in the value of the asset corresponds to a high volume of trading, there is a high probability that the trend will continue to move. But if volumes are too small at a high price, growth is likely to stop and the trend may change direction. _____________________________________ Wyckoff Price Cycles. According to Wyckoff, the market can be understood and predicted using a detailed analysis of supply and demand. This can be done based on price action, volume and timeframe. By observing the behavior of large groups of investors, Wyckoff was able to learn to notice certain points during which preparations were made before a large price move. These moments were called accumulation (before the upward movement of prices) and distribution (before the fall of prices). _____________________________________ “Composite person” (major player) and phases. Wyckoff created the idea of ​​a “composite man” (from the English composite man, composite operator), which embodies the imaginary personality of the market. He invited all investors and traders to study the stock market from the point of view if it were controlled by one subject, as this could facilitate their further following the trends. At its core, the composite person represents the largest players (market makers), wealthy people and institutional investors. The behavior of a composite person is the opposite of most investors and traders that Wyckoff often observed, given their financial losses. This is the opposite of crowd action. The cycle described in the Wyckoff method consists of four main phases: 1) Accumulation (accumulation). 2) Impulse or uptrend. 3) Distribution. 4) Markdown (correction, downtrend). 1 phase. Accumulation . A composite person accumulates assets before most investors and traders begin to do so. This phase is usually marked by lateral movement. Accumulation occurs in a gradual manner to avoid significant price changes. 2 phase. Impulse or uptrend. When a composite person takes possession of a sufficient amount of assets, while the sales force is depleted, he begins to push the market upward, forming an emerging trend that gradually attracts more and more new investors, which subsequently leads to an increase in demand. 3 phase. Distribution. Then the “composite person” distributes the purchased assets. He begins to sell his profitable positions to those who enter the market at a late stage (“hamsters”). 4 phase. Markdown (correction, downtrend). Shortly after the distribution phase, the market begins to fall. In other words, after the composite person has completed the sale of a significant amount of his position, he begins to push the market down. To repeat the cycle again. The hamster is not a mammoth - it will not die out. In the end, supply becomes much larger than demand, and a downtrend will follow. _________________________________________ Approach to the Wyckoff market in five steps. Wyckoff also developed a five-step approach to the market based on numerous principles and methods. Simply put, such an approach can be considered as the procedure for applying his work in practice. S tep one: identify the current trend. The primary task is to determine the current trend and a superficial assumption where and how far it can go, in connection with which the following questions arise: "what is the current trend?", "What is the relationship between supply and demand?". Step two: determine the strength of the asset. How strong is the asset in relation to the market? Does its value move with the market or the opposite of it? Step three: find an asset with a reason for further growth. Are there enough reasons to open a position? Is the reason good enough for the potential benefit (consequence) to justify the possible risks in the future? Fourth step: determine the likelihood of cost increases. Is the asset ready for the intended move? What is its position relative to the current trend? Does the price and volume of trades correspond to possible growth? This step often includes Wyckoff tests for the purchase and sale of the selected asset. Step Five: Your Login Time. The last step contains all the timing information. For the most part, this is due to the analysis of a trading instrument to compare their behavior with the main market. In cryptocurrency, for example, with bitcoin. __________________________________________ Wyckoff Trading Schemes. Accumulation and distribution schemes are the most popular part of Wyckoff’s work, at least among cryptocurrency communities. This model breaks down these two schemes into smaller sections of five phases (from A to E), as well as several events that are briefly described below. Pay attention to the phases and letter designations on the graph that I showed on the ADA / BTC pair. A diagram of the accumulation phases is shown. Which are relevant for trading now ACCUMULATION DIAGRAM PS - preliminary support (initial support) the first resistance - appears after a significant decrease in the price, the volume increases, and the price accelerates the decrease over time. SC - the culmination of sales - there is a sharp drop in prices for large volumes. AR - automatic rally (automatic upward movement) appears because there are very few sellers in the market, and buyers quickly raise the price up. ST- secondary test (repeated test) - occurs to check the forces of supply and demand. There may be several ST and SC. ST can even slightly break the price level set by SC. Spring ("Spring") - does not always occur, in the late stages of accumulation. The logic of false breakdown. Test - Occurs after Spring is formed and should be on a small volume. Usually above the low at a lower level. SOS - a sign of strength (signs of strength) the price begins to rise and stands out from the price range TR (trading range) with an increased volume. LPS - the last support point, the last resistance level, occurs after a breakdown (SOS), this is a return of prices in the vicinity of TR with low volume and low price dynamics. BU (back up) - the return of prices to the accumulation channel, which follows the realization of the profit of short-term investors and is a demand test. It does not always happen, for obvious reasons. Phase A. The strength of sales decreases and the downtrend begins to slow down. This stage is usually marked by an increase in trading volume. Preliminary support (from the English preliminary support, abbr. PS) indicates that new customers are starting to appear, but this is still not enough to stop the downward movement. The culmination of sales (from the English selling climax, abbr. SC) is formed through intense activity aimed at selling assets, as a result of which investors begin to capitulate. This often manifests itself as the highest point of volatility, when panic sales form high candles and wicks. A strong drop quickly develops into a jump or automatic rally (AR), due to the fact that buyers begin to absorb excess supply. Thus, the trading range (TR) of the accumulation scheme is determined as the distance between the minimum culmination of sales and the maximum of automatic rally. A secondary test (ST) occurs when a drop in market prices crosses the sales climax (SC) to verify the validity of a downtrend. In this case, trading volume and market volatility are usually lower than usual. While the second test often forms a higher minimum relative to the culmination of sales, this does not always happen according to plan. Phase B. Based on the Wyckoff law of causation, phase B can be considered as a cause that leads to a certain effect. Phase B is the consolidation phase in which a composite person accumulates the largest amount of assets. At this stage, the market tends to test various levels of resistance and support in the area of ​​its trading range. Numerous secondary tests (STs) may occur during phase B. In some cases, they show higher highs (bull traps) and lows (bear traps) with respect to the culmination of sales and the automatic rally, like phase A. Phase C. This phase is a typical period of asset accumulation. It is often the last bear trap before the market begins to show higher lows. During phase C, the composite person provides a small proposal, and in fact, those who were supposed to sell their assets have already done so. During this phase, support levels begin to break through to stop traders and mislead investors. We can describe this as the last attempt to buy an asset at a lower price before the start of an uptrend. Thus, the bear trap encourages small investors to abandon the holding of their assets. However, in some cases, support levels can be maintained, and the "spring" simply does not begin. In other words, there may be another accumulation scheme, which includes slightly different elements, but not “spring”. However, the overall structure of the circuit remains valid. Phase D. Phase D represents the transition between cause and effect. It is located between the accumulation zone (phase C) and the breakout of the trading range (phase E). Typically, a significant increase in trading volume and volatility occurs during phase D. Usually it assumes the last point of support (from the English last point support, abbr. LPS), demonstrating a lower minimum before the market begins to move up. LPS often precedes breakthrough resistance levels, which in turn creates higher highs. This indicates the manifestation of signs of strength (from the English. Signs of strength, abbr. SOS), as the previous resistance levels become new levels of support. Despite a somewhat confusing terminology, there may be several last points of support during this phase. They often increase trading volume when testing new zones. In some cases, the price may create a small consolidation zone before effectively breaking through a larger trading range and moving on to phase E. Phase E. Phase E is the last step in the accumulation pattern. It is marked by a clear penetration of the trading range due to increased demand in the market, which indicates the beginning of an uptrend. __________________________________________ Volume in separate phases (VSA). A key element in the analysis of the Wyckoff method is the preservation of volume at the individual stages of accumulation / distribution. Phase A. In this phase, dynamic movements of prices with an increased volume occur. We have new highs / lows and climax points, followed by automatic price rallies in the opposite direction, and then retest on a smaller volume. This phase forms the border of the TR (trading range) channel, in which the price will consolidate until the rebound in phase D and E Stage B. Here, large investors get rid of their last position from the previous trend and prepare for its reversal. Phase C. This is a very important phase, because in phase C it comes to the end of the current trend. Weak players leave the market for Spring (accumulation) or UTAD (distribution). If these formations do not exist, then we are dealing with LPS, where the inability to continue the current trend is visible, the price practically does not move. Phase D. With signs of weakness in the current trend from phase C, the time comes to show the strength of the adversary. The price breaks the level in the expected direction, with high dynamics and increased volume. Phase E. Confirmation of our assumptions and completion of the accumulation / distribution process. Price accelerates in the expected direction. If we were unable to join the movement during phase D, then further problems may already arise with this. And this deal will be less profitable. ______________________________ Conclusion on the Wyckoff trading method. Almost a hundred years have passed since the publication of the work, but the Wyckoff method is still in demand to this day. By nature, the market does not always exactly follow similar trading patterns. In practice, accumulation and distribution patterns can occur in different ways. For example, in some cases, phase B can last much longer than expected. For this reason, spring, UTAD and other tests may simply be absent. However, Wyckoff's work offers a wide range of reliable trading techniques that are based on numerous theories and principles. His work is certainly valuable to thousands of investors, traders and analysts around the world. The accumulation and distribution schemes described in this article may be suitable for understanding the general order of cycles in financial markets. But recently, due to the widespread introduction of algorithmic trading and the use of it by large players, it has become increasingly difficult to notice a large player on highly liquid instruments, but it is possible. According to three schemes of dialing / resetting by the position algorithm. This analysis method is more relevant for medium-liquid instruments, where fewer algorithms and highly professional traders are clearly hard to see. One person can hide his real work, and do fake trade for dozens of people. It is clear that with good preparation, it is possible to calculate and understand what will happen next, but naturally this is not an analysis of the schedule. Analysis of the schedule in the work of a truly successful trader in fact takes no more than 20-30% of the work. __________________________________ It is impossible to describe everything in one article. The Wyckoff method at first glance seems complicated, but it is not. The main thing is to understand the essence of the work and practice trading tools. To start, start trading with a symbolic amount. Always remember, a theory without practice is zero. Once again, the Wyckoff method works well on medium-liquid instruments such as cryptocurrencies, but not lower than the top 100.
Education
by SpartaBTC
6
Wyckoff trading using the example of ADA/BTC Accumulation schemePay attention to the phases and letter designations on the graph that I showed on the ADA / BTC pair. (Cardano). A diagram of the accumulation phases is shown. Which are relevant for trading now. Several trading methods are combined on the chart: 1) Trading by the Wyckoff method. 2) Trade in horizontal channels. 3) Trade from important areas (price reversal points). 4) Trading in secondary local trends. Now the price is at the important zone of the mirror level which, from the development of the situation, can act as support or resistance. Channel pitch 30%. You can work in two directions. _________________________________ About Wyckoff's trading method. The forerunner of volume analysis (VSA) is Richard Wyckoff. Roughly speaking, the whole point of the method can be expressed - trade for a major market player. The creator of this technique himself was a man who had a system-forming influence on stock trading. It was not a poor theorist who got rich after publishing books! He was a very successful trader and earned impressive capital in his day. The very method that he was allowed to achieve and the entire 40 years of experience in trading, he published in his book in the public domain is already closer to his death Wall Street Ventures and Adventures Through Forty Years. At the end of his life's journey, Wyckoff became more altruistic, and decided to share the knowledge that led him to wealth. He died in 1934. The Wyckoff trading method was developed in the early 1930s. It consists of a number of principles and strategies originally developed for traders and investors. Wyckoff devoted much of his life experience to studying market behavior, and his work still has an impact on much of modern technical analysis (TA). Currently, the Wyckoff method is applied to all types of financial markets, although initially it was focused only on stocks. During the creation of his work, Wyckoff was inspired by the trading methods of other successful traders (especially Jesse Livermore). Today, he enjoys the same respect as other key figures such as Charles Dow and Ralph Nelson Elliott . But for example, unlike Elliot’s theory, which is good in theory, but not always applicable in practice, the Wyckoff method is many times more effective for making money not in theory, but in practice. _________________________________________ According to Richard Wyckoff's trading method, there are 3 laws: 1) The law of supply and demand . 2) The law of causation. 3) The law of communication efforts and results. The first law states that the value of assets begins to rise when demand exceeds supply, and accordingly falls in the reverse order. This is one of the most basic principles in the financial markets, which does not exclude Wyckoff in his work. We can represent the first law in the form of three simple equations: 1) Demand> supply = price increases. 2) Demand <offer = price falls. 3) Demand = supply = no significant price change (low volatility ). The second law states that the differences between supply and demand are not a coincidence. Instead, they reflect preparatory actions resulting from certain events. In Wyckoff's terminology, the accumulation period (cause) ultimately leads to an uptrend (consequence). In turn, the distribution period (cause) provokes the development of a downtrend (consequence). Wyckoff’s third law states that price changes are the result of common efforts that are displayed on the trading volume . In the case when the growth in the value of the asset corresponds to a high volume of trading, there is a high probability that the trend will continue to move. But if volumes are too small at a high price, growth is likely to stop and the trend may change direction. _____________________________________ Wyckoff Price Cycles. According to Wyckoff, the market can be understood and predicted using a detailed analysis of supply and demand . This can be done based on price action, volume and timeframe. By observing the behavior of large groups of investors, Wyckoff was able to learn to notice certain points during which preparations were made before a large price move. These moments were called accumulation (before the upward movement of prices) and distribution (before the fall of prices). _____________________________________ “Composite person” (major player) and phases. Wyckoff created the idea of ​​a “composite man” (from the English composite man, composite operator), which embodies the imaginary personality of the market. He invited all investors and traders to study the stock market from the point of view if it were controlled by one subject, as this could facilitate their further following the trends. At its core, the composite person represents the largest players (market makers), wealthy people and institutional investors. The behavior of a composite person is the opposite of most investors and traders that Wyckoff often observed, given their financial losses. This is the opposite of crowd action. The cycle described in the Wyckoff method consists of four main phases: 1) Accumulation (accumulation). 2) Impulse or uptrend. 3) Distribution. 4) Markdown (correction, downtrend). 1 phase. Accumulation. A composite person accumulates assets before most investors and traders begin to do so. This phase is usually marked by lateral movement. Accumulation occurs in a gradual manner to avoid significant price changes. 2 phase. Impulse or uptrend. When a composite person takes possession of a sufficient amount of assets, while the sales force is depleted, he begins to push the market upward, forming an emerging trend that gradually attracts more and more new investors, which subsequently leads to an increase in demand. 3 phase. Distribution. Then the “composite person” distributes the purchased assets. He begins to sell his profitable positions to those who enter the market at a late stage (“hamsters”). 4 phase. Markdown (correction, downtrend). Shortly after the distribution phase, the market begins to fall. In other words, after the composite person has completed the sale of a significant amount of his position, he begins to push the market down. To repeat the cycle again. The hamster is not a mammoth - it will not die out. In the end, supply becomes much larger than demand, and a downtrend will follow. _________________________________________ Approach to the Wyckoff market in five steps. Wyckoff also developed a five-step approach to the market based on numerous principles and methods. Simply put, such an approach can be considered as the procedure for applying his work in practice. Step one: identify the current trend. The primary task is to determine the current trend and a superficial assumption where and how far it can go, in connection with which the following questions arise: "what is the current trend?", "What is the relationship between supply and demand?". Step two: determine the strength of the asset. How strong is the asset in relation to the market? Does its value move with the market or the opposite of it? Step three: find an asset with a reason for further growth. Are there enough reasons to open a position? Is the reason good enough for the potential benefit (consequence) to justify the possible risks in the future? Fourth step: determine the likelihood of cost increases. Is the asset ready for the intended move? What is its position relative to the current trend? Does the price and volume of trades correspond to possible growth? This step often includes Wyckoff tests for the purchase and sale of the selected asset. Step Five: Your Login Time. The last step contains all the timing information. For the most part, this is due to the analysis of a trading instrument to compare their behavior with the main market. In cryptocurrency, for example, with bitcoin . __________________________________________ Wyckoff Trading Schemes. Accumulation and distribution schemes are the most popular part of Wyckoff’s work, at least among cryptocurrency communities. This model breaks down these two schemes into smaller sections of five phases (from A to E), as well as several events that are briefly described below. Pay attention to the phases and letter designations on the graph that I showed on the ADA / BTC pair. A diagram of the accumulation phases is shown. Which are relevant for trading now ACCUMULATION DIAGRAM PS - preliminary support (initial support) the first resistance - appears after a significant decrease in the price, the volume increases, and the price accelerates the decrease over time. SC - the culmination of sales - there is a sharp drop in prices for large volumes. AR - automatic rally (automatic upward movement) appears because there are very few sellers in the market, and buyers quickly raise the price up. ST- secondary test (repeated test) - occurs to check the forces of supply and demand . There may be several ST and SC . ST can even slightly break the price level set by SC . Spring - does not always occur, in the late stages of accumulation. The logic of false breakdown. Test - Occurs after Spring is formed and should be on a small volume . Usually above the low at a lower level. SOS - a sign of strength (signs of strength) the price begins to rise and stands out from the price range TR (trading range) with an increased volume . LPS - the last support point, the last resistance level , occurs after a breakdown (SOS), this is a return of prices in the vicinity of TR with low volume and low price dynamics. BU (back up) - the return of prices to the accumulation channel, which follows the realization of the profit of short-term investors and is a demand test. It does not always happen, for obvious reasons. Phase A. The strength of sales decreases and the downtrend begins to slow down. This stage is usually marked by an increase in trading volume . Preliminary support (from the English preliminary support, abbr. PS) indicates that new customers are starting to appear, but this is still not enough to stop the downward movement. The culmination of sales (from the English selling climax, abbr. SC ) is formed through intense activity aimed at selling assets, as a result of which investors begin to capitulate. This often manifests itself as the highest point of volatility , when panic sales form high candles and wicks. A strong drop quickly develops into a jump or automatic rally (AR), due to the fact that buyers begin to absorb excess supply. Thus, the trading range ( TR ) of the accumulation scheme is determined as the distance between the minimum culmination of sales and the maximum of automatic rally. A secondary test ( ST ) occurs when a drop in market prices crosses the sales climax ( SC ) to verify the validity of a downtrend. In this case, trading volume and market volatility are usually lower than usual. While the second test often forms a higher minimum relative to the culmination of sales, this does not always happen according to plan. Phase B. Based on the Wyckoff law of causation, phase B can be considered as a cause that leads to a certain effect. Phase B is the consolidation phase in which a composite person accumulates the largest amount of assets. At this stage, the market tends to test various levels of resistance and support in the area of ​​its trading range. Numerous secondary tests ( STs ) may occur during phase B. In some cases, they show higher highs (bull traps) and lows (bear traps) with respect to the culmination of sales and the automatic rally, like phase A. Phase C. This phase is a typical period of asset accumulation. It is often the last bear trap before the market begins to show higher lows. During phase C, the composite person provides a small proposal, and in fact, those who were supposed to sell their assets have already done so. During this phase, support levels begin to break through to stop traders and mislead investors. We can describe this as the last attempt to buy an asset at a lower price before the start of an uptrend. Thus, the bear trap encourages small investors to abandon the holding of their assets. However, in some cases, support levels can be maintained, and the "spring" simply does not begin. In other words, there may be another accumulation scheme, which includes slightly different elements, but not “spring”. However, the overall structure of the circuit remains valid. Phase D. Phase D represents the transition between cause and effect. It is located between the accumulation zone (phase C) and the breakout of the trading range (phase E). Typically, a significant increase in trading volume and volatility occurs during phase D. Usually it assumes the last point of support (from the English last point support, abbr. LPS ), demonstrating a lower minimum before the market begins to move up. LPS often precedes breakthrough resistance levels, which in turn creates higher highs. This indicates the manifestation of signs of strength (from the English. Signs of strength, abbr. SOS), as the previous resistance levels become new levels of support. Despite a somewhat confusing terminology, there may be several last points of support during this phase. They often increase trading volume when testing new zones. In some cases, the price may create a small consolidation zone before effectively breaking through a larger trading range and moving on to phase E. Phase E. Phase E is the last step in the accumulation pattern. It is marked by a clear penetration of the trading range due to increased demand in the market, which indicates the beginning of an uptrend. __________________________________________ Volume in separate phases (VSA). A key element in the analysis of the Wyckoff method is the preservation of volume at the individual stages of accumulation / distribution. Phase A. In this phase, dynamic movements of prices with an increased volume occur. We have new highs / lows and climax points, followed by automatic price rallies in the opposite direction, and then retest on a smaller volume . This phase forms the border of the TR (trading range) channel, in which the price will consolidate until the rebound in phase D and E Stage B. Here, large investors get rid of their last position from the previous trend and prepare for its reversal. Phase C. This is a very important phase, because in phase C it comes to the end of the current trend. Weak players leave the market for Spring (accumulation) or UTAD (distribution). If these formations do not exist, then we are dealing with LPS , where the inability to continue the current trend is visible, the price practically does not move. Phase D. With signs of weakness in the current trend from phase C, the time comes to show the strength of the adversary. The price breaks the level in the expected direction, with high dynamics and increased volume . Phase E. Confirmation of our assumptions and completion of the accumulation / distribution process. Price accelerates in the expected direction. If we were unable to join the movement during phase D, then further problems may already arise with this. And this deal will be less profitable. ______________________________ Conclusion on the Wyckoff trading method. Almost a hundred years have passed since the publication of the work, but the Wyckoff method is still in demand to this day. By nature, the market does not always exactly follow similar trading patterns. In practice, accumulation and distribution patterns can occur in different ways. For example, in some cases, phase B can last much longer than expected. For this reason, spring, UTAD and other tests may simply be absent. However, Wyckoff's work offers a wide range of reliable trading techniques that are based on numerous theories and principles. His work is certainly valuable to thousands of investors, traders and analysts around the world. The accumulation and distribution schemes described in this article may be suitable for understanding the general order of cycles in financial markets. But recently, due to the widespread introduction of algorithmic trading and the use of it by large players, it has become increasingly difficult to notice a large player on highly liquid instruments, but it is possible. According to three schemes of dialing / resetting by the position algorithm. This analysis method is more relevant for medium-liquid instruments, where fewer algorithms and highly professional traders are clearly hard to see. One person can hide his real work, and do fake trade for dozens of people. It is clear that with good preparation, it is possible to calculate and understand what will happen next, but naturally this is not an analysis of the schedule. Analysis of the schedule in the work of a truly successful trader in fact takes no more than 20-30% of the work. __________________________________ It is impossible to describe everything in one article. The Wyckoff method at first glance seems complicated, but it is not. The main thing is to understand the essence of the work and practice trading tools. To start, start trading with a symbolic amount. Always remember, a theory without practice is zero. Once again, the Wyckoff method works well on medium-liquid instruments such as cryptocurrencies, but not lower than the top 100.
Education
by SpartaBTC
4
Combining wyckoff's theory with ONCHAIN data"This is a hypothesis that needs more testing to be more precise." Wyckoff's theory t is one of the most influential theories of market expression, and the most important components of which are lateral movement areas and trends. This theory turns the graph into something like Dots and lines (stations and paths). But it is not as easy to use as written in books. After getting acquainted with Wyckoff's theory, I read several books on the subject, hoping that they could help me identify this area of ​​lateral movement, the area of accumulation, or distribution. But there was a fundamental drawback. It is challenging to diagnose this issue. In fact, the rules discussed in these books are highly interpretive and subjective, and two different individual traders may come to exactly opposite conclusions based on their interpretation. But as I became more familiar with the onchain analysis, an idea came to my mind that might be useful for more objectively recognizing charts based on Wyckoff's theory. Composite Man: Wyckoff proposed a theory to help understand price movements in stocks. this is the “Composite Man” theory. (The same concept of whales or strong hands.) he said: “…all the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man’s operations. Let us call him the Composite Man, who, in theory, sits behind the scenes and manipulates the stocks to your disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand it.” (The Richard D. Wyckoff Course in Stock Market Science and Technique, section 9, p. 1-2) In fact, composite Man is a hypothetical man who has so much money and stocks that when he wants he can gradually increase the price by buying stocks and creating demand, and when the price goes high enough he selles his stock and lower the price. The composite man is the main player in the market. Wyckoff says that if you want to make a good profit from the market, figure out what a composite man game is. In fact, having a way of showing us where the Composite Man is in the market, can help us understand future trends Who are the strong hands in the cryptocurrency market? (I use the strong hand word here instead of the composite man) There are those who buy or sell more per capita than other market participants (retailers). To understand this in the bitcoin market, I have used 3 charts and concepts: 1- Sending Addresses: The number of coins addresses making inflow transactions to the exchange. Indicates the number of sellers' wallets (number of sellers) 2- buyers Addresses: The number of coins addresses making outflow transactions from the exchange. Indicates the number of buyers' wallets (number of buyers) 3- Pay attention to this issue: the volume of transactions shows both the volume of sales and the buy (Volume of buy and sale is equal in the market) Considering the above 3 issues, it can be concluded: - If the number of Receiving Addresses is higher than the Sending Addresses (the number of people who bought compared to the number of those who sold), it indicates that more people bought and fewer people sold (given that the volume of sales and buys are the same) So the sellers were stronger hands. In such a situation, the composite man is on the sales side. - If the number of Sending Addresses is higher than the Receiving Addresses (number of people who have sold more than the number of people who have bought), it indicates that more people have been sellers and fewer people have been buyers (given that the volume of sales and buys are the same) so the buyers were stronger hands. In such a situation, the Composite man is on the buying side. To do this, the oscillator at the bottom of the chart divides the Number of Receiving Addresses by the Number of Sending Addresses. Numbers above 1.2 indicate that the Composite man is on the side of the sellers and should expect a price reduction in the future. Values below 1 (or 1.2) indicate that the Composite man is on the buyers side. And we should expect price increases in the future.
BITSTAMP:BTCUSDEducation
by cryptoonchain
XAUUSD Wyckoff Accumulation - Don't get caught out!Illustrated above is a break out of an accumulation set up which should see gold recapturing the price levels it fell through last week. The immediate upside price objectives are 1802,1811 and 1828. Last weeks decline found preliminary support (PS) at 1794. This temporary relief is usually followed by what is known as a selling climax (SC) which took gold down to 1786. We saw first signs of exhaustion at this stage confirmed by the automatic rally (AR) back towards the preliminary support (PS) , before a secondary test (ST) saw price retracing back towards the climax lows. What follows next usually leaves an asset temporarily range-bound and is characterised by several rallies and secondary tests; the highest and lowest price points outlining the support and resistance levels for the range. An initial a sign of strength (SOS) signified that a bottom had occurred with buyers emerging. This was subsequently followed by another sell off which often breaks the selling climax (SC) lows briefly. A key indicator to look out for at this stage is volume. Lower volume than during the initial selling climax (SC) indicates a possible (Spring) with confirmation of the Spring being further strengthened by another attempted sell off to the last point of support (LPS) which witnesses price bouncing back off the support line identified during the earlier stages. From this point onwards, price is expected to retrace back up and break out of the range targeting previous levels of distribution. Whilst the longer term technicals and sentiment remain bearish, bulls have the near-term technical advantage. A daily close below 1785 will be required to change this near-term outlook. We can expect for gold to retest the 1828-1834 price level again. A successful break of this could lead bulls back up to the 1855-1860 level. I hope you found this useful, do leave your thoughts in a comment below. As always, a 'like' and 'follow' provides encouragement to share further ideas. Thank you for taking the time. BeyondEdge Your Edge Is Your Perception. Go Beyond.
FOREXCOM:XAUUSDEducation
by BeyondEdge
7
Part 1: A simple analysis of Wyckoff of Wall StreetWyckoff was a pioneer in the technical analysis of the stock market in the early 20th century. He established the Stock Market Academy in 1930. The main course is to introduce how to identify the dealer’s process of collecting chips and the process of distributing chips/judge. Second and third, in the basic law of "causality", the horizontal P&F count within the trading range represents the cause, and the subsequent price changes represent the result. Fourth, fifth, the relationship between price and volume on the candlestick chart to analyze the relationship between supply and demand. This law sounds simple, but it takes a long time to practice in order to accurately grasp the volume and price. I heard that Wall Street financial institutions are using Wyckoff's trading method to judge the trend of the stock market and look for opportunities. So what exactly is Wyckoff's theory? Today, I will introduce to you the famous Wyckoff transaction method. The background of the birth of Wyckoff theory Wyckoff's theory was proposed by Richard Wyckoff. He was a pioneer in the technical analysis of the stock market in the early 20th century. He and Dow Jones, Gunn, Elliott, and Merrill Lynch are considered the five giants of technical analysis. Wyckoff is good at summarizing his years of failures in stock investment and is committed to introducing individual investors to the rules of the game in the market and the impact of large funds behind them. In 1930, he established the Stock Market Academy. The main course is to introduce how to identify the dealer's process of collecting chips and the process of distributing chips. Till there are still many professional traders and institutional investors applying Wyckoff's method. Two Five Steps of Wyckoff Analysis (1) Determine the current state of the market and possible future trends. Judging the current market trends and future trends can help us decide whether to enter the market and go long or short. (2) Choose stocks that are consistent with market trends. In an uptrend, choose stocks that are trending stronger than the market. In a downtrend, choose stocks that are weaker than the market. (3) Choose stocks whose "reason" equals or exceeds your minimum target. An important part of Wyckoff's trading selection and management is his unique method of using long-term and short-term trading point forecasts to determine price targets. In Wyckoff's basic law of "causality", the horizontal P&F count within the trading range represents the cause, and subsequent price changes represent the result. (4) Make sure that the stock is ready to move. (5) When the stock market index reverses, there must be contingency measures Three-quarters of the stocks are moving in line with the market. Grasping the market trends can increase the success rate of transactions. Wyckoff's price cycle Wyckoff believes that through detailed supply and demand analysis, including research on price behavior, volume, and time. The market can be understood and predicted. Wyckoff's 3-Laws Wyckoff’s icon analysis method is based on three laws, which affect all aspects of stock analysis. For example, the forecast of the market and individual stocks, how to select stocks, and the appropriate points to enter the market. 1. The principle of supply and demand determines the direction of the price. When supply is less than demand, prices will rise; when supply exceeds demand, prices will fall. Traders can analyze the relationship between supply and demand through the relationship between price and volume on the K-line chart. This law sounds simple, but it takes a long time to practice to accurately grasp the relationship between volume and price. 2. The principle of causality can explain the magnitude of future price rises and falls. Causality can help investors predict target prices. Calculate the size of the future market by calculating the chips in the sideways interval. You can use a point and figure chart to analyze the cause and predict the result. The "cause" is the number of points in the horizontal interval in the point and figure chart, and the "effect" is the ups and downs of the stock price caused by these points. 3. The principle of inconsistent volume and price can provide an early warning of trend changes. Inconsistency between volume and stock prices is often a signal of a change in trend. For example, in the case of continuous heavy volume, the increase in stock prices is getting smaller and smaller. This phenomenon shows that the dealer is shipping. Application of Wyckoff Transaction Law Let's use the dollar index to explain some of Wyckoff's concepts. The long-term bear market after its peak in 2001 ended in 2009. The fall method without resistance from 2001 to 2005 has proved to be an oversold market, and then the rebound in 2005 was relatively large, which we call the market-to-sales ratio (PS), and the subsequent fall speed tells us that the trigeminal indicator (SC) occurred NS. Looking at the increase in AR, the loss of SC is almost flattened, and the resistance of the supply line is completely negated, which shows that demand has absorbed the selling in the supply area. Wyckoff believes that the popularity indicator (AR) is the beginning of the true volatility (TR). Whether this TR is distributed or demanded depends on subsequent development. During the development of TR, CM's methods began to show. From their behavioral characteristics, it can be seen that this TR is a collection and distribution. Of course, after knowing the accumulation or distribution, you also know whether the market outlook is entering a bull market or continuing a bear market. In 2009 and 2011, the position of the ST tells us that the demand is greater than the supply. Otherwise, the demand generated on the SC will be absorbed by the large supply, causing the bear market to continue. Based on these characteristics, we judged that the accumulation may be greater than the distribution. Because if it is a distribution, the supply is still surplus, then any demand accumulated by the rebound will not help, and the price can only continue to look for greater demand. In conclusion: For the Wyckoff transaction law, many professional traders are using it, but the retail public is still not widely used. The completeness, systematicness, and logic of Wyckoff's method, as well as the ability to find high-probability and high-yield transactions, make his stock selection method and investment strategy stand the test of time. Wyckoff’s training methods enable investors to make sensible, fact-based trading decisions without being disturbed by emotions. Using the Wyckoff method, traders can put funds on the side of the smart money that is the main force in the market. As the content of Wyckoff transaction law is more, more knowledge about Wyckoff transaction law, I will write another article to introduce to you.
NSE:SBINEducation
by forextidings
5
Smart Money Concepts Diagram With Wyckoff SchematicsThis is a Smart Money Concepts Diagram With Labeled Wyckoff Accumulation And Distribution Schematics. These are the main smart money trade setups that you will find in your charts, this is how smart money (big banks, funds, composite man, etc.) manipulate markets to engineer liquidity. Wyckoff methods teach a bigger picture view of the markets and why they are moving, many times you will see smart money setups inside of bigger picture Wyckoff schematics that form certain parts of the schematic itself. I hope you find this to be a useful reference diagram for Smart Money trade setups 😁 If you have any questions please comment below and I can make updates to the F.A.Q.
BITSTAMP:BTCUSDEducation
by renegadeforex
11
Wyckoff's Accumulation phaseThis is Wyckoff's Accumulation phase that is tricky to understand, Wyckoff's methods are real smart money concept. Actually Wyckoff's understand how SM place their orders. So after a long time by studying markets sir Wyckoff distributed his knowledge between public. And reality is Support and Resistance work but not so nicely SM know how retail traders trade the market. So they break the retail levels induces public and collect their orders and reduce public From trades. Concepts are little bit complicated to apply in real time chart, but it actually works. If anyone wants to learn those concepts then they can search on Google 'Wyckoff's method'.
Education
by HelloSujoyGain
BTC Wyckoff Accumulation Accumulation: Wyckoff Events school.stockcharts.com PS—preliminary support, where substantial buying begins to provide pronounced support after a prolonged down-move. Volume increases and price spread widens, signaling that the down-move may be approaching its end. SC—selling climax, the point at which widening spread and selling pressure usually climaxes and heavy or panicky selling by the public is being absorbed by larger professional interests at or near a bottom. Often price will close well off the low in a SC, reflecting the buying by these large interests. AR—automatic rally, which occurs because intense selling pressure has greatly diminished. A wave of buying easily pushes prices up; this is further fueled by short covering. The high of this rally will help define the upper boundary of an accumulation TR. ST—secondary test, in which price revisits the area of the SC to test the supply/demand balance at these levels. If a bottom is to be confirmed, volume and price spread should be significantly diminished as the market approaches support in the area of the SC. It is common to have multiple STs after a SC. Note: Springs or shakeout usually occur late within a TR and allow the stock’s dominant players to make a definitive test of available supply before a markup campaign unfolds. A “spring” takes price below the low of the TR and then reverses to close within the TR; this action allows large interests to mislead the public about the future trend direction and to acquire additional shares at bargain prices. A terminal shakeout at the end of an accumulation TR is like a spring on steroids. Shakeouts may also occur once a price advance has started, with rapid downward movement intended to induce retail traders and investors in long positions to sell their shares to large operators. However, springs and terminal shakeouts are not required elements: Accumulation Schematic 1 depicts a spring, while Accumulation Schematic 2 shows a TR without a spring. Test— Large operators always test the market for supply throughout a TR (e.g., STs and springs) and at key points during a price advance. If considerable supply emerges on a test, the market is often not ready to be marked up. A spring is often followed by one or more tests; a successful test (indicating that further price increases will follow) typically makes a higher low on lesser volume. SOS—sign of strength, a price advance on increasing spread and relatively higher volume. Often a SOS takes place after a spring, validating the analyst’s interpretation of that prior action. LPS—last point of support, the low point of a reaction or pullback after a SOS. Backing up to an LPS means a pullback to support that was formerly resistance, on diminished spread and volume. On some charts, there may be more than one LPS, despite the ostensibly singular precision of this term. BU—“back-up” . This term is short-hand for a colorful metaphor coined by Robert Evans, one of the leading teachers of the Wyckoff method from the 1930s to the 1960s. Evans analogized the SOS to a “jump across the creek” of price resistance, and the “back up to the creek” represented both short-term profit-taking and a test for additional supply around the area of resistance. A back-up is a common structural element preceding a more substantial price mark-up, and can take on a variety of forms, including a simple pullback or a new TR at a higher level. Accumulation: Wyckoff Phases Phase A: Phase A marks the stopping of the prior downtrend. Up to this point, supply has been dominant. The approaching diminution of supply is evidenced in preliminary support (PS) and a selling climax (SC). These events are often very obvious on bar charts, where widening spread and heavy volume depict the transfer of huge numbers of shares from the public to large professional interests. Once these intense selling pressures have been relieved, an automatic rally (AR), consisting of both institutional demand for shares as well as short-covering, typically ensues. A successful secondary test (ST) in the area of the SC will show less selling than previously and a narrowing of spread and decreased volume, generally stopping at or above the same price level as the SC. If the ST goes lower than that of the SC, one can anticipate either new lows or prolonged consolidation. The lows of the SC and the ST and the high of the AR set the boundaries of the TR. Horizontal lines may be drawn to help focus attention on market behavior, as seen in the two Accumulation Schematics above. Sometimes the downtrend may end less dramatically, without climactic price and volume action. In general, however, it is preferable to see the PS, SC, AR and ST, as these provide not only a more distinct charting landscape but a clear indication that large operators have definitively initiated accumulation. In a re-accumulation TR (which occurs during a longer-term uptrend), the points representing PS, SC and ST are not evident in Phase A. Rather, in such cases, Phase A resembles that more typically seen in distribution (see below). Phases B-E generally have a shorter duration and smaller amplitude than, but are ultimately similar to, those in the primary accumulation base. Phase B: In Wyckoffian analysis, Phase B serves the function of “building a cause” for a new uptrend (see Wyckoff Law #2 – “Cause and Effect”). In Phase B, institutions and large professional interests are accumulating relatively low-priced inventory in anticipation of the next markup. The process of institutional accumulation may take a long time (sometimes a year or more) and involves purchasing shares at lower prices and checking advances in price with short sales. There are usually multiple STs during Phase B, as well as upthrust-type actions at the upper end of the TR. Overall, the large interests are net buyers of shares as the TR evolves, with the goal of acquiring as much of the remaining floating supply as possible. Institutional buying and selling imparts the characteristic up-and-down price action of the trading range. Early on in Phase B, the price swings tend to be wide and accompanied by high volume. As the professionals absorb the supply, however, the volume on downswings within the TR tends to diminish. When it appears that supply is likely to have been exhausted, the stock is ready for Phase C. Phase C: It is in Phase C that the stock price goes through a decisive test of the remaining supply, allowing the “smart money” operators to ascertain whether the stock is ready to be marked up. As noted above, a spring is a price move below the support level of the TR (established in Phases A and B) that quickly reverses and moves back into the TR. It is an example of a bear trap because the drop below support appears to signal resumption of the downtrend. In reality, though, this marks the beginning of a new uptrend, trapping the late sellers (bears). In Wyckoff's method, a successful test of supply represented by a spring (or a shakeout) provides a high-probability trading opportunity. A low-volume spring (or a low-volume test of a shakeout) indicates that the stock is likely to be ready to move up, so this is a good time to initiate at least a partial long position. The appearance of a SOS shortly after a spring or shakeout validates the analysis. As noted in Accumulation Schematic #2, however, the testing of supply can occur higher up in the TR without a spring or shakeout; when this occurs, the identification of Phase C can be challenging. Phase D: If we are correct in our analysis, what should follow is the consistent dominance of demand over supply. This is evidenced by a pattern of advances (SOSs) on widening price spreads and increasing volume, as well as reactions (LPSs) on smaller spreads and diminished volumes. During Phase D, the price will move at least to the top of the TR. LPSs in this phase are generally excellent places to initiate or add to profitable long positions. Phase E: In Phase E, the stock leaves the TR, demand is in full control and the markup is obvious to everyone. Setbacks, such as shakeouts and more typical reactions, are usually short-lived. New, higher-level TRs comprising both profit-taking and acquisition of additional shares (“re-accumulation”) by large operators can occur at any point in Phase E. These TRs are sometimes called “stepping stones” on the way to even higher price targets. source:https://school.stockcharts.com/doku.php?id=market_analysis:the_wyckoff_method
BITFINEX:BTCUSDEducation
by SALEHvert
Wyvkoff - Basic Scheme of AccumulationNearly 100 years ago, Richard D Wyckoff born in the 19th century was a famous stock trader and investor. Wyckoff developed and carved out a revolutionary and ground breaking methodology which interlinked the institutional activities and large organisations to price movement within the chart. Wyckoff’s method and edge is based on logical reading of price action and volume. The Wyckoff method provides traders and investors with the tools, knowledge and ability to exploit markets movements consistently, whilst minimising risk exposure and aiding capital preservation, across multi-asset classes. The Wyckoff methodology provides the opportunity to select high probability trading opportunities with a solid reward/risk The detailed image / graphic is a typical 'basic scheme of accumulation focusing on the Phases and different key metrics / elements that make up all of the moving parts. PS = Preliminary Supply SC - Sellers Climax AR =Automatic Reaction ST = Secondary Test UA = Upthrust Action ST as SOW = Secondary Test as Sign Of Weakness / Sample of Weakness in test function SP = Spring Test = Test Spring LPS = Last point of Support BU = Back Up BUEC = Back up to the Edge of the Creek SOS = Sign of Strength Best Regards Phantom
Education
by Phantom_Trading