The chart shows the main stages in market movement analysis: accumulation, rise, and fall. Let's explain each stage:
1. Accumulation stage:
• This stage usually appears after a period of long decline or stability in the market.
• The market here is characterized by horizontal movement, as the price moves in a narrow range (support and resistance zone).
• This stage indicates that large investors (whales) are quietly buying assets in preparation for the next stage.
• This stage is considered a good opportunity to buy before prices rise.
2. Markup phase:
• This phase begins when demand for the asset increases, causing the price to break through the resistance level.
• The price movement accelerates upward as new investors enter.
• This phase can be long and depends on the momentum generated by market confidence.
• Investors who bought during the accumulation phase benefit from large profits.
3. Distribution phase:
• It occurs after the bullish phase when large investors start selling their assets to realize their profits.
• Sideways movement may be apparent at first, followed by a pronounced decline as the width increases.
• Unprofessional investors may become confused and start selling when prices fall, accelerating the decline.
Repetition:
After the bearish phase ends, the cycle often repeats itself in the same way (consolidation > rise > fall). This repetition depends on market psychology and investor behavior.
Therefore, understanding these phases helps in making smart investment decisions, such as entering during the accumulation and exiting during the rise to avoid losses in the decline phase.
