Preliminary Support (PS):
This phase occurs after a significant downtrend, and it represents the efforts of smart money (institutions) accumulating shares at lower prices.
Identify a consolidation or sideways movement on the price chart after the downtrend.
Watch for decreasing volume during this consolidation phase, compared to the volume during the preceding downtrend. The decreasing volume indicates that selling pressure is drying up, and the market might be approaching the end of the downtrend.
Selling Climax (SC):
The Selling Climax is a sharp and sudden price drop during the downtrend, indicating panic selling by retail traders and the exhaustion of selling pressure.
Look for a spike in volume during a sharp and sudden price drop. The spike in volume confirms that panic selling has occurred and that the selling pressure may have reached its peak.
Automatic Rally (AR):
The Automatic Rally is a bounce in price after the Selling Climax, caused by short-term traders covering their short positions and bargain hunters stepping in.
Observe a moderate increase in volume during the bounce, but it should be lower than the volume seen during the Selling Climax. This indicates that the buying interest is not yet significant.
Secondary Test (ST):
The Secondary Test occurs after the Automatic Rally and represents a retest of the Selling Climax zone.
Watch for an increase in volume during the Secondary Test, especially if the price fails to break above the Selling Climax zone. Higher volume during the decline indicates that sellers are still active.
Sign of Weakness (SOW):
The Sign of Weakness is a price decline that occurs after the Secondary Test, indicating increased selling pressure.
Look for a significant increase in volume during the price decline of the Sign of Weakness. The higher volume indicates that the selling pressure is stronger.
Upthrust (UT):
The Upthrust is a false breakout above the Secondary Test or PS area, where the price briefly moves above resistance but quickly reverses and closes below it.
Observe the volume during the Upthrust. It is often higher than the volume seen during the Secondary Test and is a crucial confirmation of the false breakout.
Upthrust After Distribution (UTAD):
The Upthrust After Distribution is the final phase of Wyckoff Redistribution.
It occurs after the Upthrust and confirms the completion of the distribution phase.
During the UTAD, the price experiences a sharp increase, potentially testing the resistance of the previous Upthrust (UT) or coming close to breaking it.
However, the key characteristic of the UTAD is that the price ultimately fails to sustain the upward momentum and quickly reverses, breaking below the Preliminary Support (PS) level.
Watch for a sharp increase in volume during the UTAD phase, especially when the price approaches the resistance level. The failure to sustain higher prices and the presence of higher selling volume during the subsequent decline confirm the UTAD and the conclusion of the redistribution phase.
This phase occurs after a significant downtrend, and it represents the efforts of smart money (institutions) accumulating shares at lower prices.
Identify a consolidation or sideways movement on the price chart after the downtrend.
Watch for decreasing volume during this consolidation phase, compared to the volume during the preceding downtrend. The decreasing volume indicates that selling pressure is drying up, and the market might be approaching the end of the downtrend.
Selling Climax (SC):
The Selling Climax is a sharp and sudden price drop during the downtrend, indicating panic selling by retail traders and the exhaustion of selling pressure.
Look for a spike in volume during a sharp and sudden price drop. The spike in volume confirms that panic selling has occurred and that the selling pressure may have reached its peak.
Automatic Rally (AR):
The Automatic Rally is a bounce in price after the Selling Climax, caused by short-term traders covering their short positions and bargain hunters stepping in.
Observe a moderate increase in volume during the bounce, but it should be lower than the volume seen during the Selling Climax. This indicates that the buying interest is not yet significant.
Secondary Test (ST):
The Secondary Test occurs after the Automatic Rally and represents a retest of the Selling Climax zone.
Watch for an increase in volume during the Secondary Test, especially if the price fails to break above the Selling Climax zone. Higher volume during the decline indicates that sellers are still active.
Sign of Weakness (SOW):
The Sign of Weakness is a price decline that occurs after the Secondary Test, indicating increased selling pressure.
Look for a significant increase in volume during the price decline of the Sign of Weakness. The higher volume indicates that the selling pressure is stronger.
Upthrust (UT):
The Upthrust is a false breakout above the Secondary Test or PS area, where the price briefly moves above resistance but quickly reverses and closes below it.
Observe the volume during the Upthrust. It is often higher than the volume seen during the Secondary Test and is a crucial confirmation of the false breakout.
Upthrust After Distribution (UTAD):
The Upthrust After Distribution is the final phase of Wyckoff Redistribution.
It occurs after the Upthrust and confirms the completion of the distribution phase.
During the UTAD, the price experiences a sharp increase, potentially testing the resistance of the previous Upthrust (UT) or coming close to breaking it.
However, the key characteristic of the UTAD is that the price ultimately fails to sustain the upward momentum and quickly reverses, breaking below the Preliminary Support (PS) level.
Watch for a sharp increase in volume during the UTAD phase, especially when the price approaches the resistance level. The failure to sustain higher prices and the presence of higher selling volume during the subsequent decline confirm the UTAD and the conclusion of the redistribution phase.