Re Accumulation

WYCKOFF METHOD
VOLUME 8
RE-ACCUMULATION
https://www.zmc-bmo.com/
TABLE OF CONTENT
1) RE-Accumulation
2) RE-Accumulation Schematics
RE-ACCUMULATION
In the course of every long uptrend there are extended
pauses. They are designed to torture long term holders
with protracted periods of boredom. As with all aspects
of the price cycle, Wyckoffians have discovered the
principles governing the dynamics of the trading range
(extended pause). In this post we will introduce the
concept known as Re-accumulation.
Once a trend emerges from an Accumulation it begins to mature and changes internally. At a
trend’s beginning, strong long term holders (the Composite Operator) are the dominant owners and
almost immediately shorter term traders jump on board the uptrend and ride along. These trader
types will not hold positions for the duration of the uptrend, they will repeatedly take quick profits
and leave at early signs of trouble. The Composite Operator has the intention of staying on the trend
for the long term. They expect pauses in the uptrend that occur along the way to the final
conclusion of the bull move. The CO will use these re-accumulation phases to add to their positions.
Wyckoffians also use these re-accumulation phases to initiate a position or add to an existing
holding.
As the trend continues to mature, the activity becomes dominated by trading, in contrast to
investing. For a period of time, accelerating momentum in an uptrend can be very profitable.
Upward and downward volatility are a signature of the late stages of a trend, and a condition of
approaching exhaustion.
A common condition at the conclusion of an advance is a false breakout of the top of the trend
channel. This is a classic sign of exhaustion and often coincides with a Buying Climax which is a
stopping action of price. The uptrend becomes so overheated with speculation that a blow-off
price movement ends the advance.
The Buying Climax is the beginning of one of two conditions: Distribution or Re-
accumulation. This is significant because one condition concludes with a resumption of
the uptrend (Re-accumulation). The other is the termination of the uptrend and the first
step in the formation of a top. Mr. Wyckoff can help us to make the all-important
distinction between the two scenarios.
The condition of Re-accumulation and Distribution begin with the same

action and in the same manner. This is a stopping action of the prior trend.
What follows is a large and often long trading range.
After the Buying Climax (BC) an Automatic Reaction (AR) follows, which is a big and volatile
correction that is far larger than the corrections within the preceding uptrend. This is confirmation
of the BC, if we were unsure before. We label the BC and AR and immediately draw a Resistance
line at the peak of the BC and a Support line at the low of the AR. If this sounds familiar, it is
because we apply the same technique after a Selling Climax and an Automatic Rally establishing
the outer boundaries of the Accumulation.
We look for trading to be largely contained by the Support and Resistance for the days
and weeks ahead (depends on the time frame you trade). During that time the
Wyckoffian will study price and volume cues as to whether Re-accumulation is occurring
or Distribution.
Initially look for a series of Secondary Tests of the BC area (Resistance) and the AR
(Support). Price activity will be abrupt and volatile with big jumps up to the highs and
reactions to the bottom of the trading range. Weak positions are being shaken out by this
extreme volatility.
The AR will scare the short term momentum traders out with some wicked losses. It all
happens very quickly. But thereafter the careful observer will see that the volatility is
receding. Declines to Support will take longer to complete and the volume will generally
be lower with each succeeding reaction to the bottom of the trading range.
As the trading range grows longer and longer, trader pessimism is on the increase.
The momentum traders are long gone and speculators are fishing in different
waters. Sometimes the catalyst for the pause is a bearish news item.
The Composite Operator is using this turn of events to begin

accumulating positions.
Just as in the initial Accumulation, the CO will systematically build positions as prices correct
toward Support and will cease buying activity as the price rises back to Resistance. It becomes
harder for the price to return back to Support and will be reflected in the bar chart with narrowing
price ranges and generally diminishing volume.
A common mistake traders make with Re-accumulation is to conclude it is Distribution and they
initiate a short selling campaign. The key points to be made are that during Distribution volatility
and volume increase as the trading range matures and prepares for a bearish downtrend. During
Re-accumulation the opposite takes place.
Re-accumulations have various ‘looks’. With the Creek we observe diminished volatility and
volume, an indication that the Re-accumulation is nearly concluded. Once CO's buying campaign
is complete, Jumping action will take the price out of the trading range and into a new markup
phase.
RE-ACCUMULATION
Re-accumulation with the Spring action
It has flat or sloppy down formation. It can potentially have lower

lows with the Spring being the lowest point of the trading range.
Image below shows example of Re-accumulation with

the Spring action
Re-accumulation after Shakeout
Absorption of supply happens in the trading range without violation of support.

Usually and depending on a position of the market, this pattern exhibits strength
Re-accumulation after decline
This is a common accumulation schematic and it offers a great visual cue to analyzing any
potential ranges. Schematics are not meant as exact replicas to the way that the range will play
out. Schematics are used to give a loose structure, it is up to you as the chartist to interpret and
analyze the price action.

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WYCKOFF METHOD

The condition of Re-accumulation and Distribution begin with the same

The Composite Operator is using this turn of events to begin

It has flat or sloppy down formation. It can potentially have lower

Image below shows example of Re-accumulation with

Re-accumulation after Shakeout

Absorption of supply happens in the trading range without violation of support.

Re-accumulation after decline

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