Wyckoff theory: GBP/AUD Application (short opportunity)
Wyckoff developed a price action market theory which is still a leading principle in today's trading practice. The Wyckoff method states that the price cycle of a traded instrument consists of 4 stages – Accumulation, Markup, Distribution, and Mark Down.
Two Rules of Richard Wyckoff
The Wyckoff theory is based primarily on price action and the different cyclical stages the market falls in to. It is essential that we discuss two important rules stated in his book “Charting the Stock Market”. These two essential rules are paraphrased below.
The first rule of Richard Wyckoff states that the market never behaves the same way. Price action will never create a move in exactly the same way that it did in the past. The market is truly unique.
The second Richard Wyckoff rule is related to the first one. It states that since every price move is unique, its analytical importance comes when compared to previous price behavior.
Two Rules of Richard Wyckoff
The Wyckoff theory is based primarily on price action and the different cyclical stages the market falls in to. It is essential that we discuss two important rules stated in his book “Charting the Stock Market”. These two essential rules are paraphrased below.
The first rule of Richard Wyckoff states that the market never behaves the same way. Price action will never create a move in exactly the same way that it did in the past. The market is truly unique.
The second Richard Wyckoff rule is related to the first one. It states that since every price move is unique, its analytical importance comes when compared to previous price behavior.
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