Formation of distribution to Wyckoff

Phase A - The moment the previous trend stops. The dominant force up to this point was demand, but now the balance is changing in favor of supply. The capitulation of the bulls has not yet happened, but it is at this stage that the bears begin to struggle to reverse the trend:
• PSY - pre-delivery - at this stage, a big stock reset begins, after a strong growth. There is an increase in volumes, while the price movement begins to expand.
• BC - the end of purchases - the volume increases greatly, the price soars sharply. Large players need to close their long positions without a strong change in the exchange rate, so at this moment news about profits or losses usually come out, which encourage retail traders to buy stocks en masse, which are dumped by big players.
• AR - automatic reaction. The price falls under the influence of decreased purchases and retained sales - AR is formed. The minimum of movement in the AR phase is the lower bound of the TR distribution.

Phase B - Creating conditions for a new trend. Smart money starts dropping long positions and opening short ones, while trying not to push the price too much in order to get a better price:
• ST - secondary (repeated) test, in which the price returns to the BC area again, to check the difference in supply/demand. The supply at such a moment must exceed the demand to confirm the top. There is a decrease in volume and spread. The secondary test (ST) can sometimes be formed in the form of an upward movement (UT). At such a moment, the price may pass the BC resistance line before turning sharply. Often, after UT, the price tests the lower bound of TR.

Phase C - This is a test of the remaining demand. The price can update the maximum, thereby collecting stops and a new portion of energy for the fall. This moment may turn out to be a trap for bulls who believe that the bullish trend has gained strength again. Big players will push the price against the crowd to close their positions in the footsteps, so it is quite dangerous to trade in this phase:
• UTAD - uptrast after distribution. In the last phases of TR, a test of new demand is possible, after the breakdown of resistance. At the same time, UTAD does not necessarily have to appear on the chart.

Phase D - breakdown of the TR line and confirmation of the bears' strength. It is here that it becomes finally clear - bulls have lost the fight and bears are pushing the price in the direction they need. Small short-term rises will often appear which can serve as good points for opening positions. The proof of the bears' strength will be the breakdown of support and a further fall in the price:
• SOW - a sign of weakness. At this point, the price falls below TR or stops a little higher. All this is happening because there is more supply than demand.
• LPSY - is the last power point. The weakness of growth is clearly observed when the price bounces and tries to move up, after the SOW test. The reason for such weakness may be a lack of demand or a large supply pushing the price down. In the LPSY phase, there is a wave of the last distribution of major players, after which a stronger fall will begin.

Phase E - acceleration of a new downtrend. The accumulated force breaks through the TR line and a strong downward movement begins, which, however, may temporarily switch to a return to the resistance line. This moment can serve as another opportunity to enter.

-------------------
Share your opinion in the comments and support the idea with Like.
Thanks for your support!








info taken from WyckoffAnalysis