Article outline: 1. Interpretation of Wyckoff distribution behavior; 2. Description of the distribution stage; 3. Deduction of volume and price of new highs and redistribution trends.
Preface: For any judgment, we should not follow the nouns or appearances. For example, the top is the main line of constantly consuming the market demand. The result of this consumption is: no matter how much money the buyer has, no matter how he buys, the price will not reach a new high. The reason for not reaching a new high is that the funds invested by the buyer are far from enough compared with the huge supply. ——"The New Wyckoff Trading Method" page 120.
The reason why I say the introduction first is that many times, people will carve out Wyckoff terms for a certain K-line. This is a wrong approach. Wyckoff should be abstract. The behavior of the main force is not completed in a certain day. For example, a buying climax may be the behavior of several consecutive days rather than one day. The main force is not one person or one organization, but a big wave created by the joint efforts of the entire organization.
If you can understand this meaning, then when you read the disk later, you don’t have to focus only on the behavior of a single K, but can look at it over a period of time. At this time, you will have a lot of new understandings.
Among the distribution volume and price behaviors, the most important and easiest to find stages are the initial supply and the climax of buying. Initial supply and buying climax are possible at different levels, but the impacts brought by different levels are different. For example, the volume and price behavior at the weekly level is stronger than that of the daily level, but the corresponding volume and price behavior must continue to appear on the daily line to form a weekly large-scale volume and price trend.
Initial supply:
The first time a large amount of supply appears in a bull market, the initial supply is shown in the chart as a large volume (significantly exceeding the usual trading volume). Large volume means that the supply is expanding. Usually, the trading volume is small because the supply is insufficient (to maintain the order of the upward trend).
Purpose: To test the demand in the market, to see how strong the demand is, and to prepare for subsequent distribution.
High shopping:
What is shown in the graph is that the trading volume has increased sharply, and the rising speed has accelerated suddenly. If the speed is measured by trend line, the rising angle begins to become very steep (going vertical, and has seriously exceeded 45 degrees).
Purpose: To distribute the chips without affecting the price. (For the specific distribution behavior, the previous teaching link is attached at the end of the article)
What happened at 40000-48000? See the following figure for details:
The entire yellow frame in the figure is the distribution range. The key is to confirm the position of the initial supply. This position gives us the main defensive position, and above and below this position range, the subsequent supply and demand conversion is formed. We escaped the top near 48,800 because we clearly saw the climax of the rush to buy. We entered again when the price broke through the ice in the three K lines and finally retracement with reduced volume.
In the 40000-48000 range, only three Wyckoff volume-price behaviors appeared, initial supply, rush buying climax, and natural decline, and none of them went into the second test stage. The confusing part is the rush buying climax. The textbook says that the rush buying climax is followed by the initial supply, and many people will understand that the K after the initial supply is the rush buying climax. This should be viewed abstractly, and not rigidly applied.
What happened in the 59000-73000 range? See the figure below for details.
The distribution phase that can be confirmed at present is the period from March 5 to May 1, which lasted for 58 days. According to the Wyckoff causality principle, in the last cycle, BTC experienced two distributions, each lasting about 90 days, a total of two phases, and a distribution of 180 days lasting about a year. Therefore, judging from the time of accumulation and distribution, BTC's historical cycle is far from over.
Now BTC has a clear period of 58 days. If this cycle is also a one-stage distribution of about 90 days, then in early June there will be a huge plunge to the position of 40,000-48,000 to absorb funds again (60 days, replicating the previous round).
Personally, I pay more attention to the trend of new highs, because if the first stage of distribution is completed in early June, there are only two weeks left. Now the supply in the right stage position is generally less than the demand, so it is highly likely that it will not fall directly. So, if it is a new high, what should happen next?
If it is the behavior of distribution on the right side again, the key to identifying the volume-price behavior is the trading volume on the right side:
If the right side moves out of the last supply point, then the trading volume in this area must be greater than the demand, which is specifically manifested as: the rising trading volume is smaller than the falling trading volume, or the rising trading volume is huge, but it cannot rise (buying and selling are integrated, indicating that someone is selling). As long as there is a large volume and stagnation on the right side, it is a very dangerous signal. You must pay attention to this.
Of course, the above is just the corresponding trend deduction. Wyckoff does not predict the market, but only deduce what kind of volume and price behavior should appear in the corresponding market. When the corresponding situation occurs, we just need to follow it.