Wyckoff Accumulation: How to Recognize and Use It?
Richard Wyckoff's method is a powerful market analysis tool that helps traders recognize accumulation and distribution phases. His charts often show up even in cryptocurrencies with low trading volumes.
What is Wyckoff accumulation?
Accumulation is a phase when large players (smart money) accumulate an asset, keeping the price in a range. Externally, this may look like a sideways flat, but inside there is a strategy of large participants.
The main stages of accumulation:
1. PS (Preliminary Support) - Preliminary support, where a slowdown in the downward trend is noticeable.
2. SC (Selling Climax) - Selling climax: large volume and a strong decline, after which growth begins.
3. AR (Automatic Rally) — Automatic rebound from the support level.
4. ST (Secondary Test) — Testing support and resistance, checking the balance of supply and demand.
5. SOS (Sign of Strength) – Breakthrough of resistance with increasing volume, which confirms the end of accumulation.
In practice, the accumulation phase often precedes a price increase, as smart money prepares the asset for a new bullish trend.
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Why can you see the Wyckoff chart on tokens?
1. Manipulation by large players. Even in small-cap cryptocurrencies, you can see behavior typical of Wyckoff phases. Large token holders (whales) often manipulate liquidity to extract maximum profit.
2. Low liquidity. It is easier to organize "accumulation" on little-known tokens, keeping the price in a narrow range.
3. Preparing for the pump. After the accumulation is complete, a sharp increase is often observed - a classic "pump".
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How to use this method in trading?
1. Look for flat ranges. Wyckoff accumulation most often occurs after a long decline. Analyze sideways movements for key support and resistance levels.
2. Evaluate volumes. Growing volumes at the support level or resistance breakout is a sure signal of accumulation.
3. Wait for the SOS signal. Breaking the upper limit of the range with increasing volume is the best entry into the trade.
4. Don't trade prematurely. ST phases and support tests can "knock you out" of a position if you enter too early.
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Conclusion
Wyckoff charts can be useful not only for large assets, but also for small-cap tokens. Watch the ranges, analyze the volumes, and don’t forget about the risks. This method can become your reliable ally in finding entry points!
