Wyckoff

The Wyckoff Method, conceptualized by Richard Wyckoff in the 1930s, endures as a prominent trading and investing strategy within the realm of modern technical analysis. It encompasses three fundamental laws, the notion of the Composite Man, Wyckoff's Schematics for chart analysis, and a five-step approach to the market.

Three Fundamental Laws

- The Law of Supply and Demand stipulates that prices ascend when demand surpasses supply and decline when supply exceeds demand.

- The Law of Cause and Effect asserts that trends emerge as a result of specific events following periods of preparation.

- The Law of Effort vs. Result delineates that changes in price align with trading volume, indicating trend continuation if in harmony.

Composite Man

Wyckoff's concept of the Composite Man portrays the market as steered by a unified entity representing major players. This entity strategically accumulates and distributes assets, thereby influencing market cycles.

Wyckoff’s Schematics

Centered on Accumulation and Distribution, Wyckoff's Schematics deconstruct market cycles into distinctive phases, including:

Accumulation: Preliminary Support, Selling Climax, Secondary Test, Cause (Phase B), Last Point Support.

Distribution: Preliminary Supply, Buying Climax, Automatic Reaction, Secondary Test, Cause (Phase B), Upthrust After Distribution, Last Point of Supply.

Five-Step Approach

1. Determine the trend.

2. Evaluate the asset's strength.

3. Identify a substantial cause.

4. Assess the likelihood of the move.

5. Time the entry.

Conclusion

The Wyckoff Method presents a systematic framework for traders and investors, emphasizing risk mitigation and potential success. Nevertheless, it is essential to recognize that no method is infallible, particularly in volatile markets such as cryptocurrencies.