A brief explanation of the Wyckoff Distribution Schematic on the 1hr Chart
What is it?
The distribution is sideways and a range-bound trading period. It usually occurs after a prolonged uptrend. This is the trading zone where big players build short positions or distribute long positions and wash out retail traders.
How I personally apply it
I typically perform top-down analysis starting with the Daily chart and working my way down to the 1–5 minute chart, where Wyckoff performs better than charts above the m15. Because posting on the m1 chart is not permitted by tradingview, this example was drawn on the 1hr.
Wyckoff Distribution Schematic Definition
BC : Buying Climax
AR : Automatic Reaction
ST : Secondary Test
UT : Up-Thrust
UTAD : Up-Thrust After Distribution
SOW : Sign Of Weakness
test : comes after breaking market structure of UT or AR
lps : Last Point of Supply
How do we draw the Wyckoff Distribution Schematic
- Buying Climax is seen as the huge movement upwards
- Automatic Reaction is seen as the huge reversal downwards
- Secondary test is often drawn just before the Up-Thrust is formed
- Up-Thrust comes after price closes above Buying Climax
- Up-Thrust After Distribution comes after price closes above the Up-Thrust
- test comes after price closes below the Up-Thrust or Automatic Reaction
- Sign Of Weakness comes after price closes below the Automatic Reaction
- lps is typically the last point of the distribution schematic and the sell entry point.
How do we enter a trade?
- Wait for price to close below the test
- Mark out market imbalance zones around the test area
- Sell Limit at the bottom of the Market Imbalance
- Stop loss above the test
What is it?
The distribution is sideways and a range-bound trading period. It usually occurs after a prolonged uptrend. This is the trading zone where big players build short positions or distribute long positions and wash out retail traders.
How I personally apply it
I typically perform top-down analysis starting with the Daily chart and working my way down to the 1–5 minute chart, where Wyckoff performs better than charts above the m15. Because posting on the m1 chart is not permitted by tradingview, this example was drawn on the 1hr.
Wyckoff Distribution Schematic Definition
BC : Buying Climax
AR : Automatic Reaction
ST : Secondary Test
UT : Up-Thrust
UTAD : Up-Thrust After Distribution
SOW : Sign Of Weakness
test : comes after breaking market structure of UT or AR
lps : Last Point of Supply
How do we draw the Wyckoff Distribution Schematic
- Buying Climax is seen as the huge movement upwards
- Automatic Reaction is seen as the huge reversal downwards
- Secondary test is often drawn just before the Up-Thrust is formed
- Up-Thrust comes after price closes above Buying Climax
- Up-Thrust After Distribution comes after price closes above the Up-Thrust
- test comes after price closes below the Up-Thrust or Automatic Reaction
- Sign Of Weakness comes after price closes below the Automatic Reaction
- lps is typically the last point of the distribution schematic and the sell entry point.
How do we enter a trade?
- Wait for price to close below the test
- Mark out market imbalance zones around the test area
- Sell Limit at the bottom of the Market Imbalance
- Stop loss above the test
