** Notes taken from: What Is the Wyckoff Method? Crypto Trading Pattern Explained (beincrypto.com)
Unlike tracking price reverals and trend-based movements, the Wyckoff Method is great for understanding and also trading ranges. These are the extended price action phases where nothing much seems to be happening with the concerned crypto.
Looks at the broader market from a supply & demand and price/volume lense.
The method segregates a trading scenario and price cycle into phases, helping traders anticipate future price action relevant to the asset.
Any standard Wyckoff price cycle can be broken into 4 phases:
First stage is about “smart money”. Informed and experienced investors accumulating the concerned crypto.
This phases looks more like a trading range surfacing after a steady price decline.
Imagine an accumulation phase to be the zone between a shopping spree and an out-of-stock announcement at the time of a clearance sale.
In the case of a market structure, the out-of-stock announcement is synonymous with the sudden price rise or the sustained uptrend that follows the accumulation phase — also known as the markup phase. This is the moment when the weak hands start ruing the decision of not holding onto the assets.
During the accumulation phase, price dips aren’t as deep, and most of the downward fluctuations are due to the weak hands exiting due to no or little movement at the counter.
The third stage is after accumulation and markup phases are complete and a trading range comes after the sustained upside. At this point, smart mone or informed investors start discretely dumping their holdings.
The distribution phases is the opposite of the accumulation phase and is followed by a sustained price dip or markdown phase.