WYCKOFF DISTRIBUTION SCHEMATIC

Outline on SIR RICHARD WYCKOFF’s DISTRIBUTION SCHEMATIC

First of all a heartfelt thanks for showing good response on first article on WYCKOFF ACCUMULATION SCHEMATIC

WYCKOFF ACCUMULATION SCHEMATICS

As mentioned in the last article that soon I will writing about WYCKOFF DISTRIBUTION SCHEMATIC so today after getting some good amount of free time here I write out my understanding in relation to WYCKOFF DISTRIBUTION SCHEMATIC. But before I proceed let me urge to you to read the article on WYCKOFF ACCUMULATION (if you have not) because the pillars of WYCKOFF SCHEMATICS are built in that article so that you will not feel that you are reading some mumbo-jumbo.

WYCKOFF DISTRIBUTION SCHEMATIC

Instead of making things too much complicated I have tried to keep the marking very simple and easy, still if you are not able to pick up the tone of those markings let’s make an attempt to understand them one by one

1. PS [PRELIMINARY SUPPLY]: This is the first point from where we start getting the signals that stock may show some signs of distribution. But understand in practical sense its too hard to say that if the actual distribution has started or not. So instead of preempting the same what I generally do is I mark my PS and try to ensure that the LPS is established near by that zone because that would give a multiple confirmation (Read this again once you have gained understanding in relation to LPS)
2. BC [BUYING CLIMAX]: As opposed to an ACCUMULATION PHASE here we are looking for BUYING CLIMAX i.e. the first point where stock halts moving higher and retraces (yes its still a retracement because distribution is not yet confirmed)
3. AR [AUTOMATIC RALLY]: As I have already discussed in ACCUMULATION PHASE that after SC there is AR in the similar manner over after BC the stock will do AR but the difference over here is AR will be a down move as against to an up move in ACCUMULATION
4. ST [SECONDARY TEST]: This move is generally engineered to check the strength of underlying demand present in the stock. Normally this moves are designed in such a manner that RETAILERS would feel that stock has still too much of strength left in the stock and will keep on buying. But trust my words its too hard to decide as the real game over here will be seen on VOLUMES i.e. when the stock is doing ST you will generally see that the stock is moving up on very low or dry volumes.
5. UPTHRUST: After moving in a range for quite some time the stock will be pushed even above the point of BC and this action will create an urgency among RETAILERS to BUY and then the stock will be slammed down. Understand one simple thing this is been done to grab LIQUIDITY because STOPS of BREAKOUT traders is lying around that region along with the STOPS of those traders who are already SHORT. If you are thinking that this is hard to catch then understand that I have already told the way in which you can catch the real move vis-a-vis artificial move i.e. check the activity on VOLUME counter. You will find out that when the stock is doing UPTHURST it may or may not do with HIGH VOLUMES but when the stock is reaching near BC then there will be surge in VOLUMES. Then the stock will move down way lower even below the zone of AR and then to trap as many retailers as possible the stock will do a FAKEOUT action and re-instill the feeling among RETAILERS that stock still has strength but the actual story is if the stock breaks below the zone of AR then its considered as the first SIGN OF WEAKNESS i.e. MINOR SIGN OF WEAKNESS
6. Now the stock is slowly and gradually picking up the pace of DISTRIBUTION. After this fake out action there will be many retailers who will try to SHORT the stock but BIG HANDS has other plans so they will keep on pumping the stock and even move the stock above the prior UPTHRUST (this is not compulsory but if happens it will add to the confirmation) and this action will be termed as UPTHRUST AFTER DISTRIBUTION and then the stock will literally smacked down without much problem because the intention for which this whole action was getting setup is fulfilled
7. LPS [LAST POINT OF SUPPLY]: This the point which is normally derived by taking into consideration the zone which is setup using the LOWS of AR & FAKE OUT ACTION (Minor Sign of Weakness). If this point coincides with PS then it would be considered as a confirmed sign for initiating SHORT trade
8. Once the stock breaks below the range and starts facing RESISTANCE then that is considered as MAJOR SIGN OF WEAKNESS because SMART HANDS are now so well positioned that they are not allowing the stock to move up

Now about where trade can be taken then the simplest way to executing SHORT trade is near LPS (retest would be much better because it would give good RRR)

Feel free to write your reviews, comments & suggestions.

HAPPY LEARNING,

With Regards,
Siddharth