swings either down or up will start with range
it wyckoff accumulation / distribution. that phase last for few days.
Wyckoff Accumulation and Distribution
The Wyckoff Accumulation and Distribution patterns are part of Richard Wyckoff's methodology for understanding market cycles and the behavior of large market participants (often referred to as "composite operators" or "smart money").
Wyckoff Accumulation
Accumulation occurs after a downtrend when large investors (smart money) start to buy assets at lower prices, gradually absorbing the supply.
Phases and Legs in Accumulation:
- Phase A: Stopping the DowntrendPreliminary Support (PS): Initial buying begins to provide support, but the downtrend isn't over.Selling Climax (SC): Intense selling leads to a sharp decline, followed by a strong rally (Automatic Rally, AR).Secondary Test (ST): Price retests the Selling Climax low, often with less volume.
- Phase B: Building a CauseIn this phase, the asset trades within a range as accumulation continues. There are multiple up and down legs within this range, serving to test supply and demand.
- Phase C: TestingSpring or Shakeout: A false breakout below the support level to trap sellers and shake out weak hands, followed by a swift return into the range.Last Point of Support (LPS): The final low before the markup phase, often occurring after the Spring.
- Phase D: MarkupSign of Strength (SOS): A strong rally with increasing volume, breaking above resistance.LPS: Higher lows and higher highs as the markup phase starts, confirming the uptrend.
- Phase E: UptrendThe asset leaves the accumulation range and begins a new uptrend, with increasing prices and volume.
The leg leading to a swift upward movement is typically Phase D, particularly after the Sign of Strength (SOS) and the final Last Point of Support (LPS).
Wyckoff Distribution
Distribution occurs after an uptrend when large investors start to sell off their holdings at higher prices, gradually unloading their positions without causing a sharp decline in price.
Phases and Legs in Distribution:
- Phase A: Stopping the UptrendPreliminary Supply (PSY): Initial selling begins to provide resistance, but the uptrend continues.Buying Climax (BC): Intense buying leads to a sharp rise, followed by a sharp decline (Automatic Reaction, AR).Secondary Test (ST): Price retests the Buying Climax high, often with less volume.
- Phase B: Building a CauseIn this phase, the asset trades within a range as distribution continues. There are multiple up and down legs within this range, serving to test supply and demand.
- Phase C: TestingUpthrust (UT): A false breakout above the resistance level to trap buyers and shake out weak hands, followed by a swift return into the range.Last Point of Supply (LPSY): The final high before the markdown phase, often occurring after the Upthrust.
- Phase D: MarkdownSign of Weakness (SOW): A strong decline with increasing volume, breaking below support.LPSY: Lower highs and lower lows as the markdown phase starts, confirming the downtrend.
- Phase E: DowntrendThe asset leaves the distribution range and begins a new downtrend, with decreasing prices and volume.
The leg leading to a swift downward movement is typically Phase D, particularly after the Sign of Weakness (SOW) and the final Last Point of Supply (LPSY).
Summary
- Wyckoff Accumulation: Consists of 5 phases, with the swift upward movement typically occurring in Phase D after the Sign of Strength (SOS) and the final Last Point of Support (LPS).
- Wyckoff Distribution: Consists of 5 phases, with the swift downward movement typically occurring in Phase D after the Sign of Weakness (SOW) and the final Last Point of Supply (LPSY).
These patterns help traders identify potential turning points in the market and align their trades with the actions of large market participants.
master this, then a swing started after consolidation gives you very huge swing
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