The Wyckoff Price cycle consist of four phases, Accumulation, Mark Up, Distribution and Mark Down. Each phase has a series of distinct characteristics to help traders identify where they and how they should trade in harmony with the market and smart money.
Here's an analysis of world's most watched index. Yes! the Dow Jones Industrial Average (DJIA) and what we have observed and expecting.
DJIA has entered into the Mark Up phase since consolidated (Re-accumulation) in late 2016.
1) The average hit a high in Feb 2018, consolidated and retested the high again but failed. This is one of the most common sign of a Distribution Phase, which we term it as Upthrust (UT) failure.
2) Next, the average made another bearish indication by trading below uptrend line (stride) in recent months. This is NOT a character of Mark Up (Bullish) phase.
3) We continue seeing large sell offs, more often then rallies during the consolidation (possible distribution phase). This is a Bearish Character which only observes in bearish phases such as Distribution and Mark Down phases. And who made these selling? Yes, the smart money.
4) Combining with technical indicator, we also noted that MACD (Monthly) has also witnessed a Bearish crossover, which helps provide further technical evidence that the bear grip on DJIA is strong.
To confirm a Distribution phase (or top), we will need DJIA to trade below 23,300, Feb 2018.
Only then, we can confirm that DJIA has seen a distribution and ready for Mark Down. Also where traders starts to short weak stocks as the market marks down.
Hope the above is a good introduction to newer traders on how we identify market/stock phases and trade in harmony with the market and smart money.
Continue to follow us, and if you interested to incorporate Wyckoff Method as part of your trading strategy which I strongly encourage!, do join us in our next Richard Wyckoff Method class in March 2019. The course is organised in Conjunction with Singapore Exchange (SGX) Academy. Click HERE for more details.