The_Altcoin_Trade

Wyckoff Distribution Explained (BTC Daily)

Long
BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
Wyckoff Distribution Explained

What the crypto market just witnessed was a near texbook definition Wyckoff Distribution play. I've explained it below.

Before I begin
  • Elon Musk did not cause this
  • China FUD is not new
  • The fundamentals and milestones that Bitcoin has met these last few months have not changed

Disclaimer: I entered positions in both the BTC and Alt Market. However, keep in mind the Bitcoin Dominance. As it rises, we may see alts lose some satoshi value.

Phases
  • Phase A: This phase means that the uptrend is slowing down or stopping. As investors who accumulated earlier sell (Distribute) their positions (PSY), an increase in supply hits the retail market. Retail investors, who are late, will buy the recently sold positions ( BC ). Both events occurring will have the (AR) as the sell-off is bought “Buy the Dip”. Volume at this point is diminishing and we see a retest of the ( BC ).
    Phase B: Phase B is when the market is being set up for the downtrend. Traditionally, institutions and market makers at this point begin distributing (selling) their positions over a period of time to exhaust the buyers. Additionally, they begin entering short positions.
    Phase C: Here the market is led into a bull trap with resistance being broken on low volume . Here we can see common patterns such as the “Double Top, Head & Shoulders etc). This is when short positions are loaded.
    Phase D: The bears gain volume with small short-lived rallys countering their price action. These are perfect opportunities to enter or add to your short position.
    Phase E: This is the downtrend and as long positions are liquidated, the probability of short sellers closing increases and set trailing stops. Climactic action may happen and then we may see a signal of the reverse. Accumulation

Terms

  • PSY (Preliminary Supply): Market makers start to sell after an upmove
    BC (Buying Climax): Retail investors flood in buying up the sold positions due to hype
    AR (Automatic Reaction): Momentum has slowed and sets up the low boundary
    ST (Secondary Test): Price revisits the area of the BC to test demand.
    SOW (Sign of Weakness): Supply is dominant with bear volume increasing as it nears support
    LPSY (Last Point of Supply): After testing support, a short rally that breaks up or down is determined by the volume . (A bear flag may appear on the chart patterns).
    UTAD (Upthrust after Distribution): Tests new demand after a breakout in resistance. It’s not a required structural element.
Comment: The above link is to a chart showing BTC/USD and BTC/USD Shorts

Comments

Here's some info supporting this - but be careful as the long might only be the pullback to then finish the completion of the distribution. Good chart.
+1 Reply
The_Altcoin_Trade Mayfair_Ventures
@Mayfair_Ventures, thanks for that. I'll be keeping tabs on those volume levels.
+1 Reply
Mayfair_Ventures The_Altcoin_Trade
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Very nice. So what can we expect in Phase E and after?
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how's about phase E? Should I buy the dip now?
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@mrpoonz4, Phase E will be accumulation. This is not financial advice but I've entered my positions and plan on holding.
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i think im about to wyckoff outta here
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That's great! I have analyzed and also found that it's a distribution pattern. and i have same thoughts that the bad news was not the reason for the drop
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@Aadil1000x, It makes me happy to hear that other traders are seeing the same pattern and trading strategy.
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Also I'm very hesitant to call this a wyckoff distribution as in wyckoff - it pays special attention to volume and this is some of the lowest volumes we've seen so far in this bull market.
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