While I’ve not written any posts around crypto trading during my time on the STEEM blockchain and HIVE blockchain, I have been a relative active cryptocurrency swing trader focused on Wyckoff/Point & Figure methodologies. I figure it’s about time I share my own perspectives and knowledge on the subject.
The core idea behind the Wyckoff Method (created by Richard D. Wyckoff) is the market behaves as a “composite man"...
“…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.”
In a nutshell, this method assumes the institutions and moneyed interests accumulate assets at specific price ranges (which is why prices remain range bound for extended periods), then mark those asset prices up relatively quickly once they have finished accumulating sufficient supply. Shortly after the asset mark-up is complete, the price action will remain range bound again as institutions and moneyed interests go through a long-term distribution phase (to prevent price slippage). Once the distribution phase is at the tail end, they push the remaining supply on the market, causing price to fall dramatically and the cycle repeats.
Learn More About the Wyckoff Method
About two weeks ago, Bitcoin surged from the top end of the accumulation range (LPS) at $7,780 to $9,460. This both exhausted the “cause” built-in from the accumulation phase and signaled the Preliminary Supply (PSY) for the start of a distribution phase. The Buying Climax (BC) on Thursday topped out at $10,060 and the Automatic Reaction (AR) which dropped the price immediately after to $8,120 on the same day (somewhat ironically) appears to have established the preliminary trading range for this Wyckoff Distribution Phase. Something noteworthy is Parabolic SAR flipped bearish right after Bitcoin dropped to $8,120, and the Parabolic SAR values are riding the upper trendline of the formation.
In the near term, I would expect a retest of the lower end of the trading range ($8,120) and potentially a Sign of Weakness (SOW) – possibly to the support level of $7,720 before moving higher again. This drop would not signal the end of the Wyckoff Distribution Phase, but simply a retest of the trading range.
Happy Trading.
