USING GOLD TO EXPLAIN WYCKOFF DISTRIBUTION SCHEMATICS!
Hello my beauties. I see very little content on the platform regarding Wyckoff, and I really believe it is a must to understand what is happening from an emotionally and mentally detached perspective on the markets. Wyckoff analysis provides you with an opportunity to do just that. I will walk you through the events and what they mean for the market, and hopefully I'll be clear enough to provide you with the reasons that compel me to take my trades. Enjoy!
Here are the distribution schematics for you to use as reference:
google.com/search?q=distribu...
1) Point of Supply (PSY): the price hesitates around the area where the support of the trading range will form; this represents a warning that the mood is changing that retail investors normally fail to notice;
2) Buying Climax (BC): big investors start releasing their shares as they are satisfied with the price target they have achieved;
3) Automatic Reaction (AR): retail investors believe that the instrument is retracing, and do not pick up on the mood shift in the price action. They enter and buy aggressively, perceiving value and expecting a trend continuation. Big investors use their longs to open short positions at advantageous prices*;
4)Second Test (ST): the second test is a test of demand. In the case of a distribution, it normally fails to generate a new high, which is a massive red flag. Retail investors usually fail to notice this warning sign, and keep on buying themselves in;
5) SOW: the price starts showing some weakness. This allows smart money to trap sellers that think the price is switching to a bearish trend ;
6) Upthrust (UT): this event allows smart money to both stop out sellers that entered the market in the previous case, and trap buyers that believe in a trend continuation. Needless to say, that's not the case.
7)Upthrust After Distribution (UTAD): the price moves higher and traps even more buyers. At this point there are multiple tests of the so called ''path of least resistance''. Big investors are adding to their positions as retail traders keep on expecting strength. By this time the faith of the price has long been decided.
8) Last Point of Supply (LPSY): the market hesitates, showing extreme difficulty pushing towards the upside. One of the last chances to enter a short position.
9) Sign Of Weakness (SOW): the price starts melting down, as the ''path of least resistance'' is now cleared by all the stop losses triggered by the sudden shift in market mood after the UTAD.
10) Last Point of Supply (LPSY): very last attempt from the buyers to hold the price up.
11) Markdown: all clear, the move begins! The price swiftly moves below the TR (trading range) and dumps towards the final target.
I hope this information helps you navigate the market and profit from them. I will be periodically publishing explanations of the Wyckoff method.
If you find this content to be valuable, like, follow, comment below.
Thank you very much for reading, and good luck.
Luca, TrickleDown FX
* on the market, for big investors to open new positions, there needs to be an availability of positions that is normally generated through manipulation. The manipulation is only necessary because there simply isn't enough liquidity for smart money to enter the market. So the only way they can open new positions is by selling into the retail longs, or vice versa. This provides them with a number of shares that would satisfy the huge sums of money hedge funds normally manage.
Here are the distribution schematics for you to use as reference:
google.com/search?q=distribu...
1) Point of Supply (PSY): the price hesitates around the area where the support of the trading range will form; this represents a warning that the mood is changing that retail investors normally fail to notice;
2) Buying Climax (BC): big investors start releasing their shares as they are satisfied with the price target they have achieved;
3) Automatic Reaction (AR): retail investors believe that the instrument is retracing, and do not pick up on the mood shift in the price action. They enter and buy aggressively, perceiving value and expecting a trend continuation. Big investors use their longs to open short positions at advantageous prices*;
4)Second Test (ST): the second test is a test of demand. In the case of a distribution, it normally fails to generate a new high, which is a massive red flag. Retail investors usually fail to notice this warning sign, and keep on buying themselves in;
5) SOW: the price starts showing some weakness. This allows smart money to trap sellers that think the price is switching to a bearish trend ;
6) Upthrust (UT): this event allows smart money to both stop out sellers that entered the market in the previous case, and trap buyers that believe in a trend continuation. Needless to say, that's not the case.
7)Upthrust After Distribution (UTAD): the price moves higher and traps even more buyers. At this point there are multiple tests of the so called ''path of least resistance''. Big investors are adding to their positions as retail traders keep on expecting strength. By this time the faith of the price has long been decided.
8) Last Point of Supply (LPSY): the market hesitates, showing extreme difficulty pushing towards the upside. One of the last chances to enter a short position.
9) Sign Of Weakness (SOW): the price starts melting down, as the ''path of least resistance'' is now cleared by all the stop losses triggered by the sudden shift in market mood after the UTAD.
10) Last Point of Supply (LPSY): very last attempt from the buyers to hold the price up.
11) Markdown: all clear, the move begins! The price swiftly moves below the TR (trading range) and dumps towards the final target.
I hope this information helps you navigate the market and profit from them. I will be periodically publishing explanations of the Wyckoff method.
If you find this content to be valuable, like, follow, comment below.
Thank you very much for reading, and good luck.
Luca, TrickleDown FX
* on the market, for big investors to open new positions, there needs to be an availability of positions that is normally generated through manipulation. The manipulation is only necessary because there simply isn't enough liquidity for smart money to enter the market. So the only way they can open new positions is by selling into the retail longs, or vice versa. This provides them with a number of shares that would satisfy the huge sums of money hedge funds normally manage.
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