Thread by @TortoiseTrading

Part 1 of Wyckoff Series: Wyckoff Explained

100+ yr old price action patterns in market cycles that help traders identify points of reversal. Accumulation(bottoms) and Distribution(tops).

We will focus on accumulation; A range where demand absorbs supply.

Example: $WAVES
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PS - Preliminary Support: The first major reaction of a downtrend signaling the bottom is near.

SC - Selling Climax: Marks the end of a downtrend with high vol and price expansion; capitulation.

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AR - Automatic Rally: Supply is exhausted and demand automatically pushes price up. The stronger the rally, the more likely the bottom is established. Sideways price from an AR signals more downside is likely.

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ST- Second Test: Should be less selling than SC. The higher the ST relative to SC, the lower the price weakness. Multiple ST can happen if professional money needs to absorb more supply.

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Creek: A squiggly line drawn across the tops of the rallies within the range. The "creek" prevents price from crossing until price finds a point of low resistance to "Jump the creek" and continue on its journey (up).

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Spring: A break below previous support to test the amount of supply. Low vol selling and minimal price reaction indicates high demand and low supply, resulting in an immediate high volume rally.

If supply is high, price will be driven down further in a terminal shakeout.

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Test: Price tests resistance turned support.

LPS - Last Point of Support: Price should indicate a lack in supply by a short move down consumed by demand.

SOS - Sign of Strength: A breakout of the top of the range followed by a retest showing demand is in control.