Ethereum : Learning Wyckoff Redistribution
#ETH showing potential signs of Institutional Absorption here.
By using Wyckoff Method of Analysis we can try and predict the direction of sideways movements by using identification characteristics on the Wyckoff Schematics.
They are to be used as a general guide and paired with volume for a sound analysis of a probable direction.
Read below for some intro education to Wyckoff. There is none to little information on Redistribution on the internet so I have created a small introduction below and on the chart.
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First, a quick introduction, Who is Richard D Wyckoff?
wyckoffanalytics.com/wyckoff-method/
"Richard Demille Wyckoff (1873–1934) was an early 20th-century pioneer in the technical approach to studying the stock market. At age 15, he took a job as a stock runner for a New York brokerage. While still in his 20s, he became the head of his own firm. He also founded and, for nearly two decades, wrote and edited “The Magazine of Wall Street,” which at one point, had more than 200,000 subscribers. Wyckoff was an avid student of the markets, as well as an active tape reader and trader. He observed the market activities and campaigns of the legendary stock operators of his time, including JP Morgan and Jesse Livermore. From his observations and interviews with those big-time traders, Wyckoff developed the Wyckoff Method that codified these traders’ best practices into laws, principles and techniques of trading methodology, money management and mental discipline."
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What is the Wyckoff Method?
The Wyckoff Method is a methodology and set of principles which helps anticipate potential future directional moves of the market, by using these principles the Wyckoff Method can help a trader time when to be in the market and when to sit it out. It also allows us to see which financial assets are weaker/stronger by a comparative analysis of different assets in the same sideways trading ranges.
By studying volume we can also gain potential insights of what the "Composite Man" is up to behind the scenes of the market.
"…all the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man’s operations. Let us call him the Composite Man, who, in theory, sits behind the scenes and manipulates the stocks to your disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand it."
(The Richard D. Wyckoff Course in Stock Market Science and Technique, section 9, p. 1-2)
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What are the 4 types of Trading Range structures?
Accumulation - Green
Heavy buying phase before uptrend begins
Reaccumulation - Blue
Rebuying to continue the uptrend
Distribution - Red
All buying is absorbed by larger interests, end of uptrend
Redistribution - Orange
Further demand is absorbed by institutional interests, continuation of downtrend
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Identifying Redistribution:
There is hardly any information on the internet regarding Redistribution, and the general consensus amongst traders is that redistribution is the hardest to spot out of the different types of market structures.
Institutional interests are usually waiting on both sides of these stops, taking profits at the bottom of the range and quickly shutting down any breakout attempts above the range.
The key characteristics of Redistribution: From my experience, Redistribution ranges are the most volatile out of all Trading Ranges, and swing wildly stopping out traders in both directions. The SoW Sign Of Weakness is shown early in the range and potentially towards the middle and end this is a high volume signature move down. There should be a creation and a defined Resistance area above which you can see price consectutively fall underneath struggling to get above, this eventually leads to the final downward breakdown which is confirmed by the LPSY (Last Point of Supply) falling underneath support.
There are MANY different Wyckoff Schematics, that work in different ways, this particular schematic I have created an example of represents closely #Bitcoins top earlier in the year for comparison. Check below.
BTC Top:
BTC Redistribution (This is the LPSY of above image as it fell under)
-Distribution can appear inside a Redistribution TR (Trading Range) as Accumulation can appear inside of a Reaccumulation TR
-Richard D Wyckoff
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So using the above ideas, if ETH fails to get back above the $4000 region soon it could be in trouble here at least in the short term, if we get a strong volume bounce above $4500 I will consider myself fully wrong for now.
I hope you enjoyed the analysis, feel free to share your thoughts and critiques in the comments and thank you for reading.
By using Wyckoff Method of Analysis we can try and predict the direction of sideways movements by using identification characteristics on the Wyckoff Schematics.
They are to be used as a general guide and paired with volume for a sound analysis of a probable direction.
Read below for some intro education to Wyckoff. There is none to little information on Redistribution on the internet so I have created a small introduction below and on the chart.
------------------------------------------------------------------------------
First, a quick introduction, Who is Richard D Wyckoff?
wyckoffanalytics.com/wyckoff-method/
"Richard Demille Wyckoff (1873–1934) was an early 20th-century pioneer in the technical approach to studying the stock market. At age 15, he took a job as a stock runner for a New York brokerage. While still in his 20s, he became the head of his own firm. He also founded and, for nearly two decades, wrote and edited “The Magazine of Wall Street,” which at one point, had more than 200,000 subscribers. Wyckoff was an avid student of the markets, as well as an active tape reader and trader. He observed the market activities and campaigns of the legendary stock operators of his time, including JP Morgan and Jesse Livermore. From his observations and interviews with those big-time traders, Wyckoff developed the Wyckoff Method that codified these traders’ best practices into laws, principles and techniques of trading methodology, money management and mental discipline."
------------------------------------------------------------------------------
What is the Wyckoff Method?
The Wyckoff Method is a methodology and set of principles which helps anticipate potential future directional moves of the market, by using these principles the Wyckoff Method can help a trader time when to be in the market and when to sit it out. It also allows us to see which financial assets are weaker/stronger by a comparative analysis of different assets in the same sideways trading ranges.
By studying volume we can also gain potential insights of what the "Composite Man" is up to behind the scenes of the market.
"…all the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man’s operations. Let us call him the Composite Man, who, in theory, sits behind the scenes and manipulates the stocks to your disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand it."
(The Richard D. Wyckoff Course in Stock Market Science and Technique, section 9, p. 1-2)
------------------------------------------------------------------------------
What are the 4 types of Trading Range structures?
Accumulation - Green
Heavy buying phase before uptrend begins
Reaccumulation - Blue
Rebuying to continue the uptrend
Distribution - Red
All buying is absorbed by larger interests, end of uptrend
Redistribution - Orange
Further demand is absorbed by institutional interests, continuation of downtrend
------------------------------------------------------------------------------
Identifying Redistribution:
There is hardly any information on the internet regarding Redistribution, and the general consensus amongst traders is that redistribution is the hardest to spot out of the different types of market structures.
Institutional interests are usually waiting on both sides of these stops, taking profits at the bottom of the range and quickly shutting down any breakout attempts above the range.
The key characteristics of Redistribution: From my experience, Redistribution ranges are the most volatile out of all Trading Ranges, and swing wildly stopping out traders in both directions. The SoW Sign Of Weakness is shown early in the range and potentially towards the middle and end this is a high volume signature move down. There should be a creation and a defined Resistance area above which you can see price consectutively fall underneath struggling to get above, this eventually leads to the final downward breakdown which is confirmed by the LPSY (Last Point of Supply) falling underneath support.
There are MANY different Wyckoff Schematics, that work in different ways, this particular schematic I have created an example of represents closely #Bitcoins top earlier in the year for comparison. Check below.
BTC Top:
BTC Redistribution (This is the LPSY of above image as it fell under)
-Distribution can appear inside a Redistribution TR (Trading Range) as Accumulation can appear inside of a Reaccumulation TR
-Richard D Wyckoff
------------------------------------------------------------------------------
So using the above ideas, if ETH fails to get back above the $4000 region soon it could be in trouble here at least in the short term, if we get a strong volume bounce above $4500 I will consider myself fully wrong for now.
I hope you enjoyed the analysis, feel free to share your thoughts and critiques in the comments and thank you for reading.
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