Wyckoff Shakeout The Wyckoff Shakeout is a key phase in Richard Wyckoff's market cycle methodology. It represents a deliberate price move designed to "shake out" weak hands, including retail traders and early participants, by inducing fear and triggering stop losses. Typically, this event occurs during the Accumulation Phase, where smart money accumulates positions at low prices.
Characteristics of the Wyckoff Shakeout:
Sharp Price Decline: Prices fall sharply below previous support levels, creating the illusion of a breakdown. Volume Spike: High volume indicates that institutional players are accumulating as retail traders panic-sell. Recovery: After the shakeout, prices quickly recover and move back into the trading range, leaving weak hands sidelined. Significance:
Acts as a liquidity grab to allow large players to build their positions. Sets the stage for a more stable accumulation zone before the uptrend begins. Boarding Bar A Boarding Bar represents a price movement or candlestick pattern that signals the beginning of a broader trend or reversal. It "boards" traders onto a momentum train, encouraging further participation in the market direction.
Key Features:
Large Candlestick or Momentum Bar: Often accompanied by significant volume, showing clear dominance of buyers or sellers. Breakout Indicator: It frequently breaks a key resistance or support level, signaling a shift in market sentiment. Follow-Through Confirmation: Subsequent bars typically validate the breakout or trend initiation. Significance:
Indicates that the accumulation (or distribution) phase is over and a new trend is underway. Helps traders identify entry points as the market begins to move decisively.
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