Part 2 - How to identify Trend Reversal | SMC

Part 1 of this Educational content we looked at Market Structural behavior in reversal of trends. Part 2, we are going to take a look at SMCs.

Important things to know about Wyckoff’s Schematics are.

  • Always start of plotting Supply and Demand zones on HTF.

  • Accumulation and Distribution should take place within HTF Supply and Demand zones.

  • An excess of demand over supply causes prices to go up because there are more people buying than selling. But, in a situation where there is more selling than buying, the supply exceeds demand, causing the price to drop.

    1. Demand > Supply = Price rises
    2. Demand < Supply = Price drops
    3. Demand = Supply = No significant price change (low volatility )

  • Re-Accumulation and Re-Distribution takes place in LTF Supply and Demand zones. These moves are done to provide more liquidity and to take out liquidity from them market. As market moves from liquidity to liquidity. In other words, Transfer of weak hands into strong hands taking place.

  • It's not important to identify all the phases of Wyckoff’s Schematics as long as you understand the basic and important laws and principles.

This is just the summary of the entire thing, and if you find it useful leave a comment below. And I will be doing a Part 3, where we will look at how to make entries and how to set possible targets.