Stockmoney Lizards, Independent Market Analyst, Dec. 2 Said Bitcoin (Bitcoin) was in the process of bottoming out within the current $15,500 to $18,000 price range, citing Wyckoff Accumulation.
Wyckoff Accumulation is a classic technical analysis setup named after early 20th century technical analysis pioneer Richard Wyckoff. Wyckoff has classified the market cycle into four distinct phases.
But is Wyckoff a reliable pattern, especially in cryptocurrency trading?
What is Wyckoff accumulation?
Wyckoff accumulation is one of the four phases described in Wyckoff’s Market Cycle Theory, the other three being markups. distribution and markdown. Simply put, each phase determines when large companies decide the direction of the market.
The accumulation phase unfolds correctly when large pockets drive purchases and boost demand.
As a result of the increased interest, the price has made higher lows and is trending higher. By doing so, the price moves above the upper trendline of the trading range and switches to the markup phase of the Wyckoff cycle.
That is, a sustained uptrend, as shown in the chart below.

Accumulated events and phases
In the accumulation phase, large companies prepare for bull strategy By accumulating assets within a certain trading range (TR). As it does so, assets purchased outnumber assets sold, reducing available supply and leading to price appreciation above TR.
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Therefore, a small investor implementing a Wyckoff accumulation strategy must correctly identify the direction and speed of movement from the TR.
Luckily, we can take help from the widely-tracked accumulation diagram Wyckoff created in the early 1930s, as shown below.

Phase A It reflects the exhaustion of the previous downtrend.starts with Reserve Support (PS) A period of heavy buying and increased trading volume This is a common bearish trend We are nearing the end.
The downside bias is when the price sell climax (SC)The point at which large professional investors begin to absorb retail selling pressure and traders start covering short positions.
As a result, the price sharply returns to its original value Auto Rally (AR) A level that defines the upper limit of the Wyckoff trading range. The price then returns to test the levels near SC. Secondary test (ST) of support.

It is common to have multiple STs in the Wyckoff accumulation, which leads the price to the consolidation area in Phase B. Theoretically, Institutional investor Accumulating assets in anticipation of markup events.
Therefore, the rebound from SC-ST level is Phase B Usually accompanied by higher volumes. Conversely, pullbacks from AR levels show a decrease in volume, indicating that liquidity is drying up on the downturn.In other words, assets are in preparation Phase C.
Phase C starts with “testThat is, the sudden arrival of a seller who risks invalidating the entire Wyckoff logic. As a result, the price increases cautiously during the testing period.
During the test period, the price was above the AR level, the so-called Sign of Strength (SOS)This is followed by the following short-term adjustments. Last Support Point (LPS).
This entire price action occurs Phase D of Wyckoff accumulation theory showing the dominance of demand over supply. As a result, traditional analysts believe that LPS is an excellent place for investors and traders to enter the market.
of Phase Ethe asset leaves the trading range entirely and enters the markup phase of the Wyckoff market cycle.
How To Trade Crypto Using Wyckoff Accumulation
As far as the cryptocurrency market is concerned, not all Wyckoff accumulation setups lead to massive price increases.
For example, the price of Bitcoin entered the SOS phase of the Wyckoff accumulation setting when it traded around $9,000 in early March 2020. But then BTC/USD fell below $5,000 by mid-March, weakening COVID-19-driven bullish Wyckoff signals. Global Market Meltdown.

Traders can employ range-bound strategies to profit from fluctuations within the trading range of the Wyckoff accumulation. Long can do so by opening his position on bounces from the ST range and seeing AR levels as his primary upside target.
At the same time, traders can set their stop loss below the ST level to avoid even bigger losses in the event of a false breakout.
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On the other hand, traders looking for aggressive long positions may need additional confirmation from crypto fundamental catalysts.
For example, Bitcoin’s Wyckoff accumulation setting from May 2021 to November 2021 saw the price rise from around $37,000 to $69,000 (after the breakout in Phase E). Explosive gains were accompanied by a loose monetary policy period and increased mainstream adoption.

However, cautious traders can wait until the Wyckoff setup reaches Phase D. Long can enter his position after the price rises above his SOS point and the volume is convincing. Of course, we recommend setting a stop loss below the SOS to exit the trade with less loss if the trend reverses.
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.