Wyckoff Distribution is the phase where institutional operators sell their accumulated positions into retail buying pressure. Key events include: Preliminary Supply (PSY), Buying Climax (BC), Automatic Reaction (AR), Secondary Test (ST), Upthrust After Distribution (UTAD), Sign of Weakness (SOW), and Last Point of Supply (LPSY).
PSY: first significant selling. BC: climactic buying with extreme volume. AR: sharp reaction down. ST: retest of BC area. UTAD: false breakout above range. SOW: Break below range support. LPSY: last rally attempt before markdown. Effort vs. result analysis critical.
UTAD (false breakout above range) with volume exhaustion on the test, SOW breaking below trading range support, LPSY rally failing at broken support (now resistance), Volume expanding on declines, contracting on rallies
Stop above the UTAD high, Trail stops using LPSY and declining resistance, Target the measured move (range height projected downward from breakdown)
Daily for distribution identification, 4H for entry timing
Distribution often mirrors accumulation in duration but can be shorter in parabolic blow-off tops. Look for effort vs. result divergences — high volume rallies with little price progress.
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.
The Composite Man is Wyckoff's conceptual framework for understanding market manipulation. Wyckoff proposed viewing the market as if a single, all-powerful operator orchestrates every move — accumulating at low prices, marking up, distributing at high prices, and marking down. While no single entity controls the market, aggregating institutional behaviour creates patterns that appear coordinated.
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.
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.