What is Wyckoff Accumulation? Wyckoff accumulation is a price range within which an asset moves without a pronounced trend, but with periodic updates of lows.
It is believed that within this range, big capital is trying to “shake out” weak hands by updating local minimums.
The fact is that many adherents of classical technical analysis set their stop losses just beyond the local minimum. A buyer’s stop loss is the sale of an asset. Accordingly, a large player lowers the price for the local minimum, provoking the triggering of stop-losses, and buys out the entire offer. Thus, he is gaining a long position at attractive prices.
After the end of the consolidation, big capital realizes that there are no more offers on the market, and releases the price upward.
- Bitcoin is forming Wyckoff accumulation – this is a bullish signal.
- At the moment, 3 out of 5 Wyckoff accumulation phases have already been formed.
- If the figure is confirmed, Bitcoin will start a new growth phase.
Recently, Wyckoff Accumulation has been frequently discussed on the network – it is a scheme of accumulation created by Richard Wyckoff that leads to a breakout in the price of an asset after its completion.
Bitcoin has been forming a pattern very similar to the Wyckoff accumulation over the past few weeks, so users are starting to speculate about the imminent growth of the cryptocurrency.
Wyckoff accumulation consists of several stages:
The first phase is the culmination of sales
Wyckoff accumulation begins after a sharp drop in the price of an asset, in our case, Bitcoin. BTC reached its all-time high of about $ 65,000 in mid-April, after which it began to fall. On May 19, there was a selling climax when BTC reached $ 30,000. Then there were massive liquidations of long positions that were opened with high leverage.
After a sharp fall, the price bounces up.
The next stage of the first phase is level testing. In this case, the price falls back to around $ 30,000, but with much lower volumes. This speaks of the depletion of the supply in the market.
The second phase is one more level testing
As part of the second phase of Wyckoff accumulation, Bitcoin is trading in the formed price range, while the bears are again trying to push the price down.
Third phase – manipulation
The third phase includes major players. They are deliberately selling bitcoin at an accelerated rate in order to drastically reduce the value and force small capital to sell their coins in a panic at low prices. As a rule, the quotes in this case fall below the local minimum in order to force the stop losses to be triggered. At this moment, big capital begins to buy out the entire offer.
During the third phase, the price does not fall as much as during the panic sales, however, volumes grow significantly.
After that, the price starts to rise.
Fourth and fifth phase
The next phases of Wyckoff accumulation have yet to be reached in the bitcoin market.
Further, the trading volume should decrease, and the price should rise above $ 40,000.
Then a small pullback will occur, which will form the last support level. And after that, the price will start to rise further.
What could go wrong?
Technical analysis does not give one hundred percent guarantees that the setup will be worked out. The worst thing at the moment is the price fixing below $ 32,700. In this case, the likelihood of further falling will increase.