Analysis and further scenario of BITCOIN using the Wyckoff Metho
Colleagues, I am glad to welcome everyone!
In today's idea, I would like to consider such a trading strategy as the Wyckoff Method. You probably heard his name more than once, but most likely, few people guess where and how it is used. Let's figure it out together!
To begin with, we know that there are only two types of movement: in consolidation (in flat, in balance), and also in trend (in imbalance). Sideways, as I previously wrote, there is always a set of large positions. Subsequently, after volume trading, in the event of an imbalance between supply and demand, the market is traded up or down.
So, let's sort out in order what is indicated on the graph:
Asset accumulation phases from A to E is an ideal model for the development of a trading flat or trading;
Lines A and B - lines indicating support for a trading flat;
lines C and D - lines indicating the resistance of a trading flat;
PS - Preliminary Support - Preliminary support is an area where significant purchases begin to support the market after a long downward movement. Volume and spread (bar range from maximum to minimum) increase and give a signal that the downward movement may already be coming to an end.
SC - Selling Climax - The culmination of sales - a bar at which the culmination of sales pressure usually occurs. This is the bar with the widest spread compared to the previous ones and with an extremely high volume and means that in this price zone panic crowd sales are absorbed by large professional players in the price range at the very minimum of the market;
AR - Automatic Rally - Automatic rally - the wave of purchases can now easily push the price up due to the fact that the sales pressure is more or less exhausted. This wave up is still heated by the fixation of shorts. The maximum of this rally helps to determine one of the resistance levels at the upper border of the trading range;
ST - Secondary Test (s) - Secondary Test (s) - professional players do a secondary test of the Sales Highlight (SC) zone in order to test the balance of supply and demand at these price levels. If the bottom is confirmed, then a substantial offer should not reappear, the volume and spread should significantly decrease when approaching the support zone created by the culmination of sales;
Creek - Secondary resistance - an analogue of the wave-like resistance line drawn near the rally peaks inside the trading flat itself. This is a secondary level of resistance that must be broken before the market can continue to continue its upward movement;
Jump across the Creek (JAC) - Breakdown of resistance in the form of a wavy line. This market action is a sign of strength (SOS) if the breakdown is made on a good spread and volume;
SOS - Sign of Strength - Sign of strength - upward movement on a good rising spread and volume;
Back up to Last Point of Support (LPS) - Rollback to support, which was resistance, on a falling spread and volume after signs of strength. This is a good place to enter a long position or to add to an existing position.
Phase A:
In this phase, the offer dominated, and, finally, signs of its depletion appear, this can be seen through the appearance of Preliminary Support (PS) and the Highlight of Sales (Selling Climax - SC). A bar with a wide spread and a high volume is called the culmination of sales, and suggests that the panic sales of the crowd were absorbed by Smart Money. When the Auto Rally (AR) is depleted, the Secondary test (ST) of the Sales Climax bar follows. Usually this Secondary test takes place on a smaller volume, in comparison with the volume in the bar of the Highlights of sales, that is, this bar appears on a narrower spread and lower volume. In the initial stage of the flat, the minimum of the High Sales Climit (SC) bar and / or the Secondary Test (ST), as well as the maximum of the Auto Rally Bar (AR) set the boundaries of the trading range.
It is also possible that phase A may end without a significant spread and volume, but it is better that a large spread and volume is present, because the stronger the sale, the more sellers' assets leave the market, thus clearing the way for a more vivid pronounced and steady upward trend.
So, phase A represents the stopping zone of the previous downward movement.
Phase B.
In phase B, supply and demand are in balance and there is no specific trend in the market. Assumptions about the future direction of the market at this stage are very contradictory and elusive, however, and in this phase you can find several useful concepts.
In the initial stage of phase B, price fluctuations tend to be quite wide, the volume is usually elevated and misleading. With the development of the trading range, supply becomes weaker and demand becomes stronger, as Professional Money accumulates sales. The closer to the end of the flat or to the beginning of the exit from the trading range, the smaller the volume. Support and resistance lines marked by horizontal lines A, B, C and D, usually inhibit the price movement in phase B and help to identify the test process, which will be repeated in phase C. Breakdowns or absence of breakdowns of these support and / or resistance zones in the future will allow us to assess the quantity and quality of supply and demand.
Phase C.
In phase C, the asset goes through a test process. The price may begin to break through the trading range upward, setting higher peaks, or it may break through support below, forming springs or shakes. It is the appearance of a shakeout or spring that is preferable, because it clears the market of the remaining supply and creates an erroneous idea of the main direction of movement. In the figure above, we just show an example of such a shakeout. (P.S. Shakeout - a sharp drop / increase in quotes after a clear trend (with subsequent recovery).
Before the test process, the trader cannot be sure that accumulation (accumulation of an asset) is occurring in the trading range, he must wait and not enter a position until there is sufficient evidence that the upward trend is about to begin. If the trader was patient enough and closely watched the developing trading range, then the moment would come when he would be confident enough in the potential upward movement. In this phase, the offer is finally exhausted and conditions arise for entering a long position with a positive risk to profit ratio.
Shakeout is a place to enter the long position. The secondary support test is a more conservative entry, because this rollback at a low volume provides more substantial evidence of market strength and greater confidence in the positive outcome of the transaction. Subsequent signs of strength will enable price to enter phase D.
Phase D.
If the trader correctly assessed the situation and entered the long on time, then there follows a constant dominance of demand over the offer and this is confirmed by signs of strength (SOS - Sign of Strength), in other words, there is a price increase in bars with a wide spread at an increased volume, followed by kickbacks or reactions (LPS - Last point of Support) on narrower spreads and lower volume. If the asset behaves as described above, then the trader will have the opportunity to add to an existing position.
If signs of strength do not appear, then you should refrain from adding to an already open position and look for a place to close the first position, since there are no signs that the upward movement has begun.
Phase E.
In phase E, the asset leaves the trading range and price controls demand. There are almost no kickbacks, even if they are, then they are short-term. Since we have an open position, our task in this phase is to maintain a position and observe the development of the trend up.
In general, in this analysis, you should rely on the law of supply and demand. Understanding and analyzing the data allows the trader to identify unique trading opportunities with potentially very good criteria for risk to profit.
Share your ideas, subscribe and like if you find it necessary.
Successful trades!
In today's idea, I would like to consider such a trading strategy as the Wyckoff Method. You probably heard his name more than once, but most likely, few people guess where and how it is used. Let's figure it out together!
To begin with, we know that there are only two types of movement: in consolidation (in flat, in balance), and also in trend (in imbalance). Sideways, as I previously wrote, there is always a set of large positions. Subsequently, after volume trading, in the event of an imbalance between supply and demand, the market is traded up or down.
So, let's sort out in order what is indicated on the graph:
Asset accumulation phases from A to E is an ideal model for the development of a trading flat or trading;
Lines A and B - lines indicating support for a trading flat;
lines C and D - lines indicating the resistance of a trading flat;
PS - Preliminary Support - Preliminary support is an area where significant purchases begin to support the market after a long downward movement. Volume and spread (bar range from maximum to minimum) increase and give a signal that the downward movement may already be coming to an end.
SC - Selling Climax - The culmination of sales - a bar at which the culmination of sales pressure usually occurs. This is the bar with the widest spread compared to the previous ones and with an extremely high volume and means that in this price zone panic crowd sales are absorbed by large professional players in the price range at the very minimum of the market;
AR - Automatic Rally - Automatic rally - the wave of purchases can now easily push the price up due to the fact that the sales pressure is more or less exhausted. This wave up is still heated by the fixation of shorts. The maximum of this rally helps to determine one of the resistance levels at the upper border of the trading range;
ST - Secondary Test (s) - Secondary Test (s) - professional players do a secondary test of the Sales Highlight (SC) zone in order to test the balance of supply and demand at these price levels. If the bottom is confirmed, then a substantial offer should not reappear, the volume and spread should significantly decrease when approaching the support zone created by the culmination of sales;
Creek - Secondary resistance - an analogue of the wave-like resistance line drawn near the rally peaks inside the trading flat itself. This is a secondary level of resistance that must be broken before the market can continue to continue its upward movement;
Jump across the Creek (JAC) - Breakdown of resistance in the form of a wavy line. This market action is a sign of strength (SOS) if the breakdown is made on a good spread and volume;
SOS - Sign of Strength - Sign of strength - upward movement on a good rising spread and volume;
Back up to Last Point of Support (LPS) - Rollback to support, which was resistance, on a falling spread and volume after signs of strength. This is a good place to enter a long position or to add to an existing position.
Phase A:
In this phase, the offer dominated, and, finally, signs of its depletion appear, this can be seen through the appearance of Preliminary Support (PS) and the Highlight of Sales (Selling Climax - SC). A bar with a wide spread and a high volume is called the culmination of sales, and suggests that the panic sales of the crowd were absorbed by Smart Money. When the Auto Rally (AR) is depleted, the Secondary test (ST) of the Sales Climax bar follows. Usually this Secondary test takes place on a smaller volume, in comparison with the volume in the bar of the Highlights of sales, that is, this bar appears on a narrower spread and lower volume. In the initial stage of the flat, the minimum of the High Sales Climit (SC) bar and / or the Secondary Test (ST), as well as the maximum of the Auto Rally Bar (AR) set the boundaries of the trading range.
It is also possible that phase A may end without a significant spread and volume, but it is better that a large spread and volume is present, because the stronger the sale, the more sellers' assets leave the market, thus clearing the way for a more vivid pronounced and steady upward trend.
So, phase A represents the stopping zone of the previous downward movement.
Phase B.
In phase B, supply and demand are in balance and there is no specific trend in the market. Assumptions about the future direction of the market at this stage are very contradictory and elusive, however, and in this phase you can find several useful concepts.
In the initial stage of phase B, price fluctuations tend to be quite wide, the volume is usually elevated and misleading. With the development of the trading range, supply becomes weaker and demand becomes stronger, as Professional Money accumulates sales. The closer to the end of the flat or to the beginning of the exit from the trading range, the smaller the volume. Support and resistance lines marked by horizontal lines A, B, C and D, usually inhibit the price movement in phase B and help to identify the test process, which will be repeated in phase C. Breakdowns or absence of breakdowns of these support and / or resistance zones in the future will allow us to assess the quantity and quality of supply and demand.
Phase C.
In phase C, the asset goes through a test process. The price may begin to break through the trading range upward, setting higher peaks, or it may break through support below, forming springs or shakes. It is the appearance of a shakeout or spring that is preferable, because it clears the market of the remaining supply and creates an erroneous idea of the main direction of movement. In the figure above, we just show an example of such a shakeout. (P.S. Shakeout - a sharp drop / increase in quotes after a clear trend (with subsequent recovery).
Before the test process, the trader cannot be sure that accumulation (accumulation of an asset) is occurring in the trading range, he must wait and not enter a position until there is sufficient evidence that the upward trend is about to begin. If the trader was patient enough and closely watched the developing trading range, then the moment would come when he would be confident enough in the potential upward movement. In this phase, the offer is finally exhausted and conditions arise for entering a long position with a positive risk to profit ratio.
Shakeout is a place to enter the long position. The secondary support test is a more conservative entry, because this rollback at a low volume provides more substantial evidence of market strength and greater confidence in the positive outcome of the transaction. Subsequent signs of strength will enable price to enter phase D.
Phase D.
If the trader correctly assessed the situation and entered the long on time, then there follows a constant dominance of demand over the offer and this is confirmed by signs of strength (SOS - Sign of Strength), in other words, there is a price increase in bars with a wide spread at an increased volume, followed by kickbacks or reactions (LPS - Last point of Support) on narrower spreads and lower volume. If the asset behaves as described above, then the trader will have the opportunity to add to an existing position.
If signs of strength do not appear, then you should refrain from adding to an already open position and look for a place to close the first position, since there are no signs that the upward movement has begun.
Phase E.
In phase E, the asset leaves the trading range and price controls demand. There are almost no kickbacks, even if they are, then they are short-term. Since we have an open position, our task in this phase is to maintain a position and observe the development of the trend up.
In general, in this analysis, you should rely on the law of supply and demand. Understanding and analyzing the data allows the trader to identify unique trading opportunities with potentially very good criteria for risk to profit.
Share your ideas, subscribe and like if you find it necessary.
Successful trades!
Comment:
09 Jan
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