Let’s analyze the candlestick chart for ‘BLB Limited’ on a monthly timeframe using Wyckoff’s market cycle principles and try to form an informed decision as to whether the stock will go up or crash in the next few months
Long-Term Downtrend (Before 2004): The chart indicates a significant markdown phase with a long-term downtrend, characterized by red candles.
Accumulation Phase (2004 – 2007): We observe a period that could suggest accumulation, as the price seems to bottom out and move sideways with smaller candlesticks, indicating less aggressive selling and potential buying interest.
Markup Phase (2007 – 2010): A substantial rise in price with green candles, along with increasing volume, implies a markup phase where demand exceeds supply.
Distribution and Subsequent Markdown (2010 – 2016): After a peak in 2010, the price action with red candles suggests a possible distribution phase, followed by a markdown as the price steadily declines.
Accumulation/Base Formation (2016 – 2021): The price enters another sideways movement, potentially indicating another accumulation phase. The small candles and relatively flat price movement suggest a balance between supply and demand.
Recent Markup Phase (2021 – Present): The recent sharp increase in price, especially the last two large green candles, signifies a strong markup phase, with the latest candle showing a significant rise in price. The volume spike on the last green candle suggests strong buying interest.
The stock currently exhibits signs of a strong markup phase, likely driven by renewed buyer interest and possibly institutional demand. However, the sudden and sharp rise in price, especially if not supported by fundamentals, could lead to an overextension of the price, which might be corrected later.
The latest candle is particularly tall with a large volume, suggesting aggressive buying. If this volume represents smart money accumulation, the price may continue to rise.
However, if this volume is the result of speculative trading, there could be a risk of a pullback if buyers begin to take profits.
In summary, ‘BLB Limited’ appears to be in a strong markup phase of the Wyckoff market cycle. Investors should monitor upcoming price action for signs of continuation or reversal.
If the next few candles continue to show increased volume and price closes higher, the markup phase may continue.
Conversely, signs of distribution, such as increased volume on price drops, would suggest the potential for a markdown phase.
Last Update : 19/02/2024
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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
