Bitcoin Wyckoff Spring setup
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In my opinion BTC has formed a Wyckoff Spring Setup, and it is ready for the next bull move.
The following link is very very useful to read with my chart.
https://phemex.com/academy/wyckoff-accumulation
Accroding to Phemex (yes I copied it because I am lazy):
The Wyckoff Accumulation
The accumulation phase is a sideways and range bound period that occurs after a prolonged downtrend. This is the area where larger players try to build positions and shake out smaller fish without causing much of a further drop in price, or the beginning of the new trend. They aim to maintain this phase until all their positions have filled, hence the name “accumulation.”
According to Wyckoff, there are six distinct parts of the accumulation phase, all with an important function. Below are all phases and labels for reference.
1 (PS) – We have the “Preliminary Support”.
This occurs after a prolonged down move and we begin to see the signs of high volume and spreads widening. We also see the first indication that the selling may be coming to an end soon as buyers begin to show up.
2 (SC) – Referred to as the “Selling Climax”.
This is where PS fails, and price begins to violently sell off. This is the panic selling phase. At this point, prices may jump by well over their norms and spreads can widen to extremes. Often, price will close far from the low and a candlestick chart view will display a very large wick.
3 (AR) – The automatic rally.
This is the part where late sellers get punished. After price has violently sold off and selling pressure is no longer dominant, buyers cause price to reverse with almost the same level of intensity as the selling climax but in the opposite direction. This is the result of short sellers covering positions. The high of this point will often define the upper range extreme for the consolidation that follows.
4 (ST) – The secondary test.
This is where price revisits the lows of the structure but in a much more controlled manner. Volume should not increase by sellers. It is entirely common to have many secondary tests.
5 – The spring.
In crypto, this pattern should be all too familiar with Altcoins that have bottomed out for some time. This is the point in which suddenly a hard test of the low occurs again as a way to mislead participants into believing the trend is resuming downwards. This is almost the equivalent behavior to a “swing failure pattern”. It is essentially a shakeout. It should be noted that this movement is not always required. From here, price should respond by quickly reclaiming the prior structural level lost.
6 (LPS, BU, SOS) – Last point of support, back up, and sign of strength.
These following patterns of behavior should be clear shifts in price action from the prior activity into the beginning of the range. This is where price begins to reclaim microstructural pivot points that were established earlier. Often, the sign of strength can actually take place immediately following the spring. This will often be a very rapid and one-sided move that signifies buyers are in total control. Volume toward the end of the range should be high and result in significant ground covered.
What follows this range is known as the mark up. By then, the deed is done, and the market often will be left chasing the move upward resulting in a prolonged positive response. Ultimately, the purpose of this entire structure was to cause commotion and confusion so that larger players could take supply from smaller players.
One of the most important details in this activity is the volume observed. We want to see that in the beginning of the range following the high volume sell off, what follows is a return to low volume. Most importantly, after the spring and ultimately through the SOS and markup we should see that buying volume has a significant impact on price movement.
----------------------------------------------------
As I implied, bearish momentum/bullish momentum is SUPER important for you to make a good trade:
- You can identify the correct impulsive/correction wave
- Combine with Volume profile, you can draw a realistic support/resistance
- You can see the actual momentum for drawing Fibonacci retracement
- You can manage your risk/reward ratio
Basically in my opinion momentum is a must-have tool in your trading arsenal.
The following link is very very useful to read with my chart.
https://phemex.com/academy/wyckoff-accumulation
Accroding to Phemex (yes I copied it because I am lazy):
The Wyckoff Accumulation
The accumulation phase is a sideways and range bound period that occurs after a prolonged downtrend. This is the area where larger players try to build positions and shake out smaller fish without causing much of a further drop in price, or the beginning of the new trend. They aim to maintain this phase until all their positions have filled, hence the name “accumulation.”
According to Wyckoff, there are six distinct parts of the accumulation phase, all with an important function. Below are all phases and labels for reference.
1 (PS) – We have the “Preliminary Support”.
This occurs after a prolonged down move and we begin to see the signs of high volume and spreads widening. We also see the first indication that the selling may be coming to an end soon as buyers begin to show up.
2 (SC) – Referred to as the “Selling Climax”.
This is where PS fails, and price begins to violently sell off. This is the panic selling phase. At this point, prices may jump by well over their norms and spreads can widen to extremes. Often, price will close far from the low and a candlestick chart view will display a very large wick.
3 (AR) – The automatic rally.
This is the part where late sellers get punished. After price has violently sold off and selling pressure is no longer dominant, buyers cause price to reverse with almost the same level of intensity as the selling climax but in the opposite direction. This is the result of short sellers covering positions. The high of this point will often define the upper range extreme for the consolidation that follows.
4 (ST) – The secondary test.
This is where price revisits the lows of the structure but in a much more controlled manner. Volume should not increase by sellers. It is entirely common to have many secondary tests.
5 – The spring.
In crypto, this pattern should be all too familiar with Altcoins that have bottomed out for some time. This is the point in which suddenly a hard test of the low occurs again as a way to mislead participants into believing the trend is resuming downwards. This is almost the equivalent behavior to a “swing failure pattern”. It is essentially a shakeout. It should be noted that this movement is not always required. From here, price should respond by quickly reclaiming the prior structural level lost.
6 (LPS, BU, SOS) – Last point of support, back up, and sign of strength.
These following patterns of behavior should be clear shifts in price action from the prior activity into the beginning of the range. This is where price begins to reclaim microstructural pivot points that were established earlier. Often, the sign of strength can actually take place immediately following the spring. This will often be a very rapid and one-sided move that signifies buyers are in total control. Volume toward the end of the range should be high and result in significant ground covered.
What follows this range is known as the mark up. By then, the deed is done, and the market often will be left chasing the move upward resulting in a prolonged positive response. Ultimately, the purpose of this entire structure was to cause commotion and confusion so that larger players could take supply from smaller players.
One of the most important details in this activity is the volume observed. We want to see that in the beginning of the range following the high volume sell off, what follows is a return to low volume. Most importantly, after the spring and ultimately through the SOS and markup we should see that buying volume has a significant impact on price movement.
----------------------------------------------------
As I implied, bearish momentum/bullish momentum is SUPER important for you to make a good trade:
- You can identify the correct impulsive/correction wave
- Combine with Volume profile, you can draw a realistic support/resistance
- You can see the actual momentum for drawing Fibonacci retracement
- You can manage your risk/reward ratio
Basically in my opinion momentum is a must-have tool in your trading arsenal.
Nota
Updated: BTC has entered the SOS area. Bulls have fully taken over, and it is very bullish in my opinion. The only downside is that my support is miscalculated however as I entered the trade in the Wyckoff candle it should not be a problem.
Penafian
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