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    What Is Wyckoff Theory

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    shivaji patil
    Wyckoff theory analyzes stock price movements and trading volume to identify accumulation and distribution patterns. It states that the market cycles through four stages: accumulation, markup, markdown, and distribution. There are three key Wyckoff rules: supply and demand, effort versus result where high volume precedes large price moves, and cause and effect where accumulation causes markup and distribution causes markdown. Consolidation occurs when the market trades within a narrow range before breaking out in a new direction. RSI and MACD are momentum indicators used to identify overbought and oversold levels and trends.

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    What Is Wyckoff Theory

    Uploaded by

    shivaji patil
    2K views13 pages
    Wyckoff theory analyzes stock price movements and trading volume to identify accumulation and distribution patterns. It states that the market cycles through four stages: accumulation, markup, markdown, and distribution. There are three key Wyckoff rules: supply and demand, effort versus result where high volume precedes large price moves, and cause and effect where accumulation causes markup and distribution causes markdown. Consolidation occurs when the market trades within a narrow range before breaking out in a new direction. RSI and MACD are momentum indicators used to identify overbought and oversold levels and trends.

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    Wyckoff theory analyzes stock price movements and trading volume to identify accumulation and distribution patterns. It states that the market cycles through four stages: accumulation, markup, markdown, and distribution. There are three key Wyckoff rules: supply and demand, effort versus result where high volume precedes large price moves, and cause and effect where accumulation causes markup and distribution causes markdown. Consolidation occurs when the market trades within a narrow range before breaking out in a new direction. RSI and MACD are momentum indicators used to identify overbought and oversold levels and trends.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    2K views13 pages

    What Is Wyckoff Theory

    Uploaded by

    shivaji patil
    Wyckoff theory analyzes stock price movements and trading volume to identify accumulation and distribution patterns. It states that the market cycles through four stages: accumulation, markup, markdown, and distribution. There are three key Wyckoff rules: supply and demand, effort versus result where high volume precedes large price moves, and cause and effect where accumulation causes markup and distribution causes markdown. Consolidation occurs when the market trades within a narrow range before breaking out in a new direction. RSI and MACD are momentum indicators used to identify overbought and oversold levels and trends.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 13
    At a glance
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    The key takeaways are about Wyckoff theory and its rules, stages of the price cycle, and technical indicators like RSI and MACD.

    The 4 stages of the Wyckoff price cycle are Accumulation Phase, Markup Phase, Distribution Phase, and Markdown Phase.

    The 3 important Wyckoff rules are Supply vs. Demand, Effort vs. Result, and Cause vs. Effect.

    Price

    Action
    Analysis
    what is Wyckoff theory?
     1)The first rule of Richard Wyckoff states that the market never
    behaves the same way. Price action will never create a move in
    exactly the same way that it did in the past. The market is truly
    unique.

     2)The second Richard Wyckoff rule is related to the first one. It states
    that since every price move is unique, its analytical importance
    comes when compared to previous price behavior.
    The Wyckoff method states that the price cycle
    of a traded instrument consists of 4 stages 

    Accumulation
    Phase

    Markdow Markup
    n Phase Phase

    Distributio
    n Phase
    PRICE
    ACTION &
    VOLUME
    There are three important Wyckoff rules:
     Supply vs. Demand

     Effort vs. Result - Effort vs. Result relationship is the data on trading Volume If
    there is an unusually high trading volume, we may expect a big price move. So, the
    big volume bar is the effort of the MARKET PLAYERS to gain dominance. The big
    market move is the result of that effort.

     Cause vs. Effect - Wyckoff states that every cause in the market leads to a
    proportional effect. Take for example the Accumulation and Distribution stages.
    Accumulation leads to Markup and the price increases, and the Distribution leads to
    Markdown and the price decreases. The Accumulation is the cause, and the Markup is
    the effect.
    What is consolidation?
     Definition:

    Consolidation is a phase where market get stuck in a range.


    And it moves in a range bound zone for some period of time before
    descending the further direction.
    RSI (Relative strength index)

     The relative index (RSI) is a momentum indicator which measure


    the strength of recent (14) price changes to calculate overbought
    & oversold condition.
     it is oscillator which has a range of 0 to 100.
     Typically for 1hr. Over 70 is considered overbought & below 30 is
    oversold.
     And for 15min. Over 80 considered overbought & below 20 is
    oversold.
    RULES TO FOLLOW UNTIL NOW

    PRICE MAKING CONSOLIDATION+


    HIGHER DIVERGENCE ON RSI PREVIOUS
    HIGH/LOWER HURDLES
    LOW
    MACD
    Moving average convergence divergence (MACD)
    is a trend following momentum indicator that
    shows the relationship between two moving
    averages (26 & 12) of a security price.

    It comes with a histogram, which measures the


    difference between fast MACD line & the signal
    line.
    HISTOGRAM

    MACD LINE
    SIGNAL LINE

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