Last Update : 18/02/2024
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What is Wyckoff Cycle ?
It helps to understand the stages & phases of market. The four phases of the Wyckoff cycle are accumulation, markup, distribution, and markdown. They represent trading behavior and price action. Once the final markdown phase of the Wyckoff cycle is complete, a new accumulation phase will kick off a new cycle
Analyzing the provided monthly chart for the Indian Energy Exchange (IEX), we can deduce the following based on the Wyckoff Method and the price volume action visible:
Prior Accumulation Phase (2017-2019): The initial period of the chart shows relatively stable price movement with no significant volume spikes. This suggests an accumulation phase where smart money could be acquiring shares without causing price surges.
Markup Phase (2020-2021): The sharp price increase in this period, particularly noticeable around 2020, with accompanying high volume, indicates a markup phase. This is where public participation increases, driven by the bullish sentiment and the actions of the Composite Man pushing prices higher.
Distribution Phase (Mid-2021): The top formation, characterized by the price reaching a peak with increased volatility and volume, suggests a distribution phase. During this period, larger operators may be offloading their positions to the public, leading to a plateau or range-bound movement.
Markdown Phase (2021-2023): Following the distribution, there’s a clear downtrend with red (bearish) candles and increasing volume, indicating a markdown phase. Prices are descending as selling pressure overcomes buying interest.
Current Phase (2023 Onwards): Most recently, there’s been some consolidation with smaller candle bodies and wicks, along with reduced volume. This could be an indication of re-accumulation or preparation for a potential reversion or continuation of the downtrend. However, the last visible candle shows a significant bearish move with increased volume, which might suggest a continuation of the markdown phase rather than a reversal.
Latest 5 Candles Analysis: The last five candles show increased volatility with bearish sentiment dominating. The presence of long upper wicks in the recent two candles indicates selling pressure and a potential rejection of higher prices. The last candle, in particular, is significantly bearish with a large body and increased volume, hinting at a strong bearish continuation.
Volume Analysis: The volume has been fluctuating, with spikes corresponding to significant price movements. The latest volume increase on a bearish candle reinforces the likelihood of continued downward pressure.
In summary, the chart presents a progression through Wyckoff’s market cycles, with the recent activity pointing towards continued bearish momentum. The increased volume accompanying the latest downturn supports this analysis. However, it’s essential to monitor subsequent price action and volume for signs of a potential phase change.
