Wyckoff Method is useful for understanding the big picture of market cycles.
The simple version has been popularised in the crypto community showing the downwards trend market leading to despair and capitulation... then rising to the highs of a blow-off market cycle top.
Some analysts believe the next cycle high will occur end of 2021.
As market conditions change, our trading style should change to accommodate.
But what most crypto analysts miss are the smaller Wyckoff accumulation/distribution phases that are constantly happening across all markets.
In this ZILUSD chart we can see a general outline for the 5 phases of Wyckoff analysis. Ultimately the pattern is only fully confirmed at its conclusion, just when a new upswing begins (Phase E), and we attempt to identify where phases C and D begin and end as the price movement progresses.
The goal is to not get mixed up with manual trades during phases B, C or D as that's where a lot of traders seems to erode their account by selling bottoms and re-buying highs. The best risk/reward opportunity is in phase E before the next mark-up phase.
So far with ZILUSD it appears we have now concluded a phase C with the secondary test, and began phase D which should show a step-by-step price increase to retest resistance.
We'll cover more on Wyckoff Method as part of our educational series on technical analysis with a special focus on strategies useful for Algo-assissted trading.
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Note: This is general insight into trading psychology. It is not financial advice. We provide analysis and tools to help traders make their own trading decisions.
The simple version has been popularised in the crypto community showing the downwards trend market leading to despair and capitulation... then rising to the highs of a blow-off market cycle top.
Some analysts believe the next cycle high will occur end of 2021.
As market conditions change, our trading style should change to accommodate.
But what most crypto analysts miss are the smaller Wyckoff accumulation/distribution phases that are constantly happening across all markets.
In this ZILUSD chart we can see a general outline for the 5 phases of Wyckoff analysis. Ultimately the pattern is only fully confirmed at its conclusion, just when a new upswing begins (Phase E), and we attempt to identify where phases C and D begin and end as the price movement progresses.
The goal is to not get mixed up with manual trades during phases B, C or D as that's where a lot of traders seems to erode their account by selling bottoms and re-buying highs. The best risk/reward opportunity is in phase E before the next mark-up phase.
So far with ZILUSD it appears we have now concluded a phase C with the secondary test, and began phase D which should show a step-by-step price increase to retest resistance.
We'll cover more on Wyckoff Method as part of our educational series on technical analysis with a special focus on strategies useful for Algo-assissted trading.
-
Note: This is general insight into trading psychology. It is not financial advice. We provide analysis and tools to help traders make their own trading decisions.
