Wyckoff distribution
Phase A. The Distribution Schematic works in the opposite way of the Accumulation. We begin with an uptrend slowing down (due to decreasing demand). The Preliminary Supply (PSY) shows that selling force is present, albeit not yet strong enough to stop the upward movement. The Buying Climax (BC) is then formed by an intense buying activity. Sadly, usually inexperienced traders that buy emotionally. Next we have an Automatic Reaction (AR) as excessive demand is absorbed by the market makers. Remember the Composite Man was accumulating before? Now he starts to distribute to the late buyers. The Secondary Test (ST) occurs when the market revisits the BC region, often creating a lower high.
Phase B. Consolidation zone. Composite Man gradually sells his assets. Upper and lower bans tested multiple times. Once again, with short term bear and bull traps. The market may even move above the resistance level created by the BC, leading to a ST that can also be called an Upthrust (UT).
Phase C. Opposite of an Accumulation String. One last bull trap after consolidation. Called the UTAD or Upthrust After Distribution.
Phase D. Again, similar to Accumulation Schematic. Last Point of Supply (LPSY) in the middle of range. Evident Sign of Weakness (SOW) when the market breaks below the support lines.
Phase E. Beginning of downtrend, evident break below the trading range. Looping back to the first law: strong dominance of supply over demand.
Phase A. The Distribution Schematic works in the opposite way of the Accumulation. We begin with an uptrend slowing down (due to decreasing demand). The Preliminary Supply (PSY) shows that selling force is present, albeit not yet strong enough to stop the upward movement. The Buying Climax (BC) is then formed by an intense buying activity. Sadly, usually inexperienced traders that buy emotionally. Next we have an Automatic Reaction (AR) as excessive demand is absorbed by the market makers. Remember the Composite Man was accumulating before? Now he starts to distribute to the late buyers. The Secondary Test (ST) occurs when the market revisits the BC region, often creating a lower high.
Phase B. Consolidation zone. Composite Man gradually sells his assets. Upper and lower bans tested multiple times. Once again, with short term bear and bull traps. The market may even move above the resistance level created by the BC, leading to a ST that can also be called an Upthrust (UT).
Phase C. Opposite of an Accumulation String. One last bull trap after consolidation. Called the UTAD or Upthrust After Distribution.
Phase D. Again, similar to Accumulation Schematic. Last Point of Supply (LPSY) in the middle of range. Evident Sign of Weakness (SOW) when the market breaks below the support lines.
Phase E. Beginning of downtrend, evident break below the trading range. Looping back to the first law: strong dominance of supply over demand.