What Is Wyckoff Method?
The Wyckoff Method is a market analysis approach developed by Richard Wyckoff in the early 1900s that explains market cycles through the lens of institutional supply and demand. It identifies four phases: accumulation (smart money buying from weak hands at lows), markup (trending up after accumulation), distribution (smart money selling to retail at highs), and markdown (trending down after distribution).
How Wyckoff Method Works
The Wyckoff accumulation schematic identifies specific events: Preliminary Support (PS), Selling Climax (SC), Automatic Rally (AR), Secondary Test (ST), Springs (price briefly dips below support to shake out weak holders), and Sign of Strength (SOS) before markup begins. Distribution has mirror events: Preliminary Supply, Buying Climax, Automatic Reaction, Secondary Test, Upthrust (false breakout above resistance), and Sign of Weakness before markdown.
Why It Matters for Traders
The Wyckoff Method is remarkably applicable to crypto markets because crypto exhibits the same institutional accumulation and distribution patterns that Wyckoff identified a century ago. The "Spring" event (a fakeout below support that triggers stop-losses before a strong reversal upward) is a recurring pattern in BTC cycles. Learning to identify Wyckoff schematics in real-time helps traders align with institutional positioning rather than being shaken out by engineered volatility.