Wyckoff Market Cycle
Overview
The Wyckoff Market Cycle consists of four phases that repeat across all markets and timeframes: Accumulation (smart money buying), Markup (trending up), Distribution (smart money selling), and Markdown (trending down). Understanding which phase the market is in helps traders align with institutional flow.
Key Concepts
Four phases: Accumulation, Markup, Distribution, Markdown. Composite Man theory — view the market as if controlled by a single operator. Supply and demand dynamics drive phase transitions. Volume analysis critical for phase identification.
Entry Signals
Accumulation phase completing (spring/test + SOS), Distribution phase completing (UTAD + SOW), Markup: buy pullbacks to rising support. Markdown: sell rallies into falling resistance.
Exit Signals
Accumulation entry exits into Markup exhaustion, Distribution short exits into Markdown exhaustion, Use volume climax signals and selling/buying tests
Best Timeframes
Daily, Weekly for phase identification; 4H for entry timing
Pro Tips
The Wyckoff cycle is fractal — it operates on 5-minute charts and weekly charts simultaneously. Use higher timeframes for phase identification and lower for precise entries.
More Topics in This Category
Sign of Strength (SOS)
A Sign of Strength is a strong rally within or out of an accumulation range that occurs on expanding volume and wide price spread. It confirms that demand has overcome supply and that the accumulation phase is likely complete. The SOS typically breaks above the range's resistance (Creek) and is followed by a Last Point of Support (LPS) pullback.
Nine Buying & Selling Tests
Wyckoff's nine buying tests and nine selling tests are systematic checklists that traders apply to determine whether an accumulation or distribution trading range has completed its purpose and is ready to transition into a markup or markdown phase. Each test evaluates a specific aspect of price and volume behaviour within the range, providing objective criteria for entering positions at the conclusion of a Wyckoff phase.
The Three Wyckoff Laws
Richard Wyckoff's three fundamental laws — the Law of Supply and Demand, the Law of Cause and Effect, and the Law of Effort versus Result — form the philosophical foundation of the Wyckoff Method. These laws explain why prices move, how far they are likely to travel, and whether a move is genuine or likely to fail. Every Wyckoff analysis technique derives from these three principles.
Accumulation Schematics
Wyckoff Accumulation is the phase where institutional operators quietly buy large positions without driving price up. The schematic includes: Preliminary Support (PS), Selling Climax (SC), Automatic Rally (AR), Secondary Test (ST), Spring/Shakeout, Sign of Strength (SOS), Last Point of Support (LPS), and the eventual Markup phase.