Wyckoff Price Action

Question 1

Name the different cyclical stages of the market?

Answer 1

Accumulation
Markup
Distribution
Markdown

Question 2

Define the accumulation phase

Answer 2

The accumulation stage is caused by increased institutional demands.

Bulls are slowly gaining power and as a result, they are poised to push prices higher.

Question 3

Define the markup phase

Answer 3

The markup is the second stage of the Wyckoff trading cycle.

Bulls gain enough power to push the price through the upper level of the range.

Question 4

Define the distribution phase

Answer 4

One indication that the market is in a distribution stage will be first sustained failure of price to create higher bottoms on the chart

The price action creates lower tops which is an indication of the market is currently experiencing sell-off

Question 5

Define markdown phase

Answer 5

The phase indicates that the bears have gained enough power to push the market in the bearish direction.

The markdown is confirmed when for price action and breaks for lower level of the flat range of the horizontal distribution channel on the chart

Question 6

Define the initial breakout (spring)

Answer 6

The initial breakout (spring) opposite to the expected price move is often associated with stop running, wherein institutions push prices to obvious stoploss areas define the required liquidity to fulfil their orders

Question 7

State the three laws which are a natural cause of a market cycle

Answer 7

1. Supply vs Demand
2. Effort vs Result
3. Cause vs Effect