WYCKOFF INTRODUCTION COURSE

AN EASY TO FOLLOW GUIDE TO LEARN THE BASICS OF THE

WYCKOFF METHODOLGY

A MODERN INTERPRETATION BY

JACK CORSELLIS
 DISCLAIMER

This course (including the videos, lecture, slides, discussion and all other information contained) is for informational and educational purposes only; it should not be construed as investment advice of
any kind. Jack Corsellis (Presenter) is not a registered investment advisor or broker-dealer, and does not purport to recommend or suggest any securities to buy or sell. The Presenter assumes no
responsibility or liability for your trading and investment results. You understand and acknowledge that there is a very high degree of risk of financial loss involved in trading securities and that you alone are
responsible for your own trading and investment decisions and results.

Wyckoff Education Ltd (“The Company”) and all associated personal including but not limited to Directors, Employees, Officers and Principals are not investment, financial, tax, or legal advisors or a broker-
dealer and does not purport to provide personalised investment, financial, tax, or legal advice in any form. The Company does not recommend the purchase of particular securities nor does The Company
promise or guarantee any particular investment results. You understand and acknowledge that there is a very high degree of risk involved in trading any financial instrument including but not limited to,
securities, options, commodities and futures trading. You acknowledge and agree that you, and not The Company or any associated personal, are solely responsible for your own investment research and
decisions. Do not trade with money that you cannot afford to lose. You understand that The Company encourages you to seek the advice of a qualified securities professional and/or tax or legal advisor, as
necessary, before making any investment, and to investigate and fully understand any and all risks before investing. The Company and associated personal assumes no responsibility or liability for your
trading and investment results. You also agree to hold The Company and any associated personal harmless for any such results or losses.

Past results of any individual traders or trading system published by The Company are not indicative of future returns by those traders or system, and are not indicative of future returns which may be
realised by you. In addition, the methods, techniques, information, content, indicators, strategies, columns, articles and all other features or information provided by The Company, or any other Wyckoff
Education Ltd product or service, (collectively, the “Information”) are provided for informational and educational purposes only and should not be construed as investment advice. Accordingly, you should
not rely on the Information in making any investment. Rather, you should always perform additional independent research in order to allow you to form your own opinion regarding investments. You are
solely responsible for your own trading decisions, and nothing in the Information is intended to be or should be interpreted as a promise or guarantee of any particular result. You should always check with
your licensed financial, investment, legal, or tax advisor to determine the suitability of any investment. Furthermore, you understand that The Company, associated personal, and its third-party providers and
or contributors may be active investors in any and all financial instruments and may or may not have open positions in any financial instrument mentioned in this course and any other associated or provided
content. You understand they have the right to freely trade in and out of financial instruments without informing you and no liability, of any kind, can be placed on them.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT
REPRESENT ACTUAL TRADING AND DO NOT INCLUDE BROKERAGE AND OTHER FEES, OR SLIPPAGE. ALSO, IN SIMULATED PERFORMANCE RESULTS, NO TRADES HAVE ACTUALLY BEEN
EXECUTED. THEREFORE, THE RESULTS MAY HAVE UNDER-OR OVER-COMPENSATED FOR THE IMPACTS OF A VARIETY OF MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED
TRADING PROGRAMS, IN GENERAL, CAN ALSO BE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO
ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.

PLEASE RESEARCH ANY STOCK VERY CAREFULLY BEFORE MAKING YOUR INVESTMENT DECISION.
 TABLE OF CONTENTS
“It’s a pursuit that is profitable… but it’s not for the slow minded or weak hearted. You must be resolute… strength of will is an
W H AT YO U ’ L L L E A R N O N absolute requirement, as is discipline, concentration, study and a calm disposition. May your effort bear fruit and strengthen your
THIS COURSE will to persevere” – R D. Wyckoff

1. Why use the Wyckoff Method?

2. A Brief History of the Wyckoff Method
3. The Wyckoff Price Cycle
4. Wyckoff Method Schematics & Labelling Keys
5. Trending and Non-Trending Environments
6. The 3 Laws
7. Understanding Money Rotation
8. Support & Resistance
9. Structural Phase Analysis
10. Optimal Entry Points
11. Optimal Exit Points
12. Case Studies & Test Your New Knowledge
 WHY USE THE WYCKOFF METHOD?
I would like to begin this course with a quote from Richard Wyckoff that is the essence of what we are trying to achieve:

“It long ago occurred to me that success in the security market demanded an understanding of the operation of those who were most influential, because these interests had
been studying the business and operating in the market for many years and were therefore experts. It was sound reasoning to suppose that a knowledge of the principles which
they used in their market operations would enable one to detect their thumbprints on the tape and to follow with pleasure and profit.” – R D.Wyckoff

The Wyckoff method is a deep study of market participant behaviour that reveals itself through non-linear fractal price structures.
Understanding the market behaviour of participants, and in particular those of most influence, enables one to anticipate future price action
with increased probability and success.

My goal with this course is to ‘open your eyes’ and start you on a journey of discovery, not only of the financial markets, but your own
psychology too.

“You cannot be successful at trading anymore than you can be at mining, manufacturing, doctoring or anything else, unless you are trained for it” – R D.Wyckoff

The majority of concepts covered in this course are part of the original Wyckoff methodology. However, others have expanded and added to
the methodology in meaningful and insightful ways. Important to note is the contributions made by Roman Bogomazov, Founder and President
of Wyckoff Analytics LLC. Several of the concepts discussed within this course Roman teaches in his own Wyckoff Trading Course and Wyckoff
Practicum Course. Details of these can be found at www.wyckoffanalytics.com.
WHAT DO YOU SEE?
“All stocks, no matter by whom are owned, bought or sold,
look alike on the tape. But the purposes behind this buying
or selling are different and these might be fairly clear to those
who understand stock market psychology” – R D. Wyckoff
WHAT DO YOU SEE? REVEALED
+ 1,300%
43 months
 THE WYCKOFF METHOD – A BRIEF HISTORY
➢ Richard Demille Wyckoff was born 2 November 1873 and died 7 March 1934.

➢ In 1907 he founded the Magazine of Wall Street, which at its height had 200,000 subscribers.

➢ In 1931 he created the Richard D Wyckoff course of Stock Market Science and Technique.

➢ Since Wyckoff’s death, his original course has lived on and the Wyckoff Methodology has been
expanded on by modern ‘Wyckoffians’ – such as: Hank Pruden, Roman Bogomazov, Bruce Fraser,
Bob Evans, Todd Butterfield & David Weis.

➢ Wyckoff used his method to become very wealthy and owned a mansion on over 9 acres in Great
Neck, New York (Hamptons). The core foundations of Wyckoff’s original course are still relevant in
the modern day.

➢ Wyckoff studied and interviewed many of the greatest market operators of the day such as Jesse
Livermore, J.P. Morgan, James R. Keenes and E.H. Harriman to understand their market operations.
From this Wyckoff developed the idea of the Composite Operator - “the fluctuations in the market
and in all the various stocks should be studied as if they were the result of one man’s operations. Let us call
him the Composite Man, who, in theory, sits behind the scenes and manipulates the stocks to your
disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand
it.” - Richard D.Wyckoff. Source: wyckoffsmi.com

“The tape is better than any inside

➢ Wyckoff taught that the chart and ‘tape’ is a deep study of market participants behaviour. If one
information if one knows how to
could interpret the actions and motives of the Composite Operator, then numerous trading and interpret it” – R D. Wyckoff
investment opportunities would present themselves.
 THE WYCKOFF METHOD – A BRIEF HISTORY

T H E B AC K B O N E O F
THE METHODOLOGY

The Wyckoff Method has a 5 step approach for stock selection and optimal entry points: 4) Determine the readiness for the stock to move.

1) Determine the present position and likely future trend of the market.
Markets move in one of two ways, trending and non-trending. Is the market currently
bullish or bearish? Is it in a trading range, and if so, what direction is the likely future
trend?
2) Select stocks in harmony with the trend.
In a bullish environment, select the strongest stocks to buy. In a bearish environment,
select the weakest stocks to short - by doing so, probabilities are increased.
3) Select stocks with a cause that equals or exceeds your minimum objective.
Wyckoff’s 9 tests for buying and selling can be used to help time
optimal entry points.
5) Time your commitment with a turn in the stock market index.
The majority of stocks move in conjunction with the major indexes.
Therefore, by using the Wyckoff method, probabilities of staying on
the right side of the market are increased. Think of this as
swimming with the tide. Often times though, the long term bias of
the market and stocks can conflict with the shorter term bias.
Many people struggle to hold two conflicting thoughts in their mind.

Point & Figure projections can be used to identify price targets on the long and short side.
The law of ‘Cause and Effect’ can be applied to horizonal P&F counts. P&F analysis will be
the topic of future courses as it is a more advanced concept.
 THE WYCKOFF PRICE CYCLE
T H E B AC K B O N E O F
THE METHODOLOGY

Price structures are non-linear and fractal in nature. However, they share
many repeatably common characteristics, due to being a visual
representation of market participants behaviour. As Jesse Livermore said
“I absolutely believe that price movement patterns are being repeated;
they are recurring patterns that repeat over and over. This is because the
stocks were being driven by humans, and human nature never changes”.

➢ Prices move in cycles and the cycle is made up of 4 phases:

1) Accumulation Phase;
2) Markup Phase;
3) Distribution Phase; and
4) Markdown Phase.

➢ Each Phase contains its own phases that have identifiably

characteristics and all are governed by Wyckoff’s 3 laws:

1) Supply & Demand;

2) Cause & Effect; and
3) Effort vs Result.

The Price Cycle can be seen on all time frames and often cycles appear
within larger cycles. One must be a dynamic, non-linear thinker, to solve
the constant puzzles. Copyright Wyckoff Education Ltd
 THE WYCKOFF PRICE CYCLE
T H E B AC K B O N E O F
THE METHODOLOGY

Before moving onto the Schematics for

stocks, think of how Christmas decoration
sellers make money from their operations.

Are they buying inventory in October,

November and December when the
general public are? Of course not. They
are accumulating their inventory between
February and August before the general
public even start thinking about Christmas.

This enables the operators to purchase

that years inventory at wholesale prices
and later on in the year sell to the public at
retail prices. This example is very similar Copyright Wyckoff Education Ltd

to the campaigns conducted by the

Composite Operator.
 SCHEMATICS
PHASE 1 – ACCUMULATION: DEFINITIONS

PS: Preliminary support is the start of significant buying providing support after a prolonged down-move. Volume increases and price spread widens, often shown by demand bars. It can be an
early indication the down-move may be the end and a trading ranges starts.

SC: Selling climax is usually climatic in nature and will be associated with some of the largest volume bars yet seen. Often demand tails will be seen and an inability for price to go lower.
Wyckoff’s Law of Effort vs Result can also be applied – i.e., significant effort yet diminishing or no downwards result.

AR: Automatic rally happens because the scales of supply and demand have altered, short covering can help propel the rally. The high of the AR helps determine the upper boundary of an
accumulation trading range.

ST: Secondary test is where price tests the SC to see the balance of supply and demand. If the ST happens on decreasing volume and price spread a bottom in the trading range is more likely to
be confirmed. Multiple STs within an accumulation trading range is normal.

UTA: Upthrust Action usually occurs in Phase B of an Accumulation or Re-Accumulation structure and is a temporary commitment above the resistance.

SPRING: Usually happens later in the trading range and allows the stock’s dominant players to test available supply before a Markup campaign. A “Spring” quickly moves price below the low of the
trading range. This action enables large interests to mislead the public about the future price direction and acquire additional shares at ‘cheap’ prices.

TEST: Throughout trading ranges large operators test the market for supply and demand at key points. If significant supply emerges on a test, the large operators will conduct further tests until
supply diminishes. A spring is often followed by several tests. A successful test makes a higher low on decreased volume – a price advance usually follows.

LPS: Last Point of Support is the low point of a reaction or pullback after a SoS. Backing up to an LPS means a pullback to support that was formerly resistance, on diminished spread and volume.
Multiple LPS’s can happen.

SoS: Sign of strength usually happens in Phase D after a Spring. It is a price advance on increasing spread and volume.

BU: “back-up” or “backing up action” happens due to short-term profit-taking after a SoS rally and a test of supply at a previous level of resistance. It usually happens before a larger price
advance begins and is similar in nature to an LPS.
 SCHEMATICS
PHASE 1 – ACCUMULATION #1

SoS

UTA
AR
PS LPS / BU

LPS

ST

SC ST TEST Copyright Wyckoff Education Ltd

SPRING
PHASE A PHASE B PHASE C PHASE D PHASE E
 SCHEMATICS
PHASE 1 – ACCUMULATION #2

The difference between the

Accumulation #1 Schematic and
Accumulation #2 Schematic has
to do with Phase C. Instead of a SoS
Spring that undercuts the lows of
the trading range, the #2
Schematic has an LPS followed UTA
by a Test or Tests that make a AR
Higher Low. Volume should also PS
decrease on the Test(s). LPS / BU

TESTS
ST LPS
Copyright Wyckoff Education Ltd

SC ST

PHASE A PHASE B PHASE C PHASE D PHASE E

 SCHEMATICS
PHASE 3 – DISTRIBUTION: DEFINITIONS

PSY: Preliminary supply is where large interests begin selling large quantities of shares after a significant price advance. Volume increase and price spread widens. Often ‘supply shoots’ can be
seen.

BC: Buying climax often has increased volume and price spread and looks climatic in nature. Urgent buying by the public is met with professionals selling. A BC often coincides with a great
earnings report or other good news, since the large operators require huge demand from the public to sell their shares without depressing the stock price. Supply shoots and increasing volume
with no upwards result are a key giveaway.

AR: Automatic reaction happens due to the significant supply coming to the market. The low of the AR can help determine the lower boundary of the distribution trading range.

ST: Secondary test is where price revisits the area of the BC to test the supply and demand balance. If supply outweighs demand it helps determine the upper boundary of the trading range.
Volume and price spread should decrease as price approaches the BC level.

UT: Upthrust usually occur in Phase B of distribution structures and is a temporary commitment above the resistance.

UTAD: Upthrust After Distribution is the opposite to a Spring. Although, it too happens in the latter stages of a trading range and provides a test of demand after a breakout above the upper
boundary. An UTAD is not a required structural element: in a distribution trading range.

LPSY: Last Point of Supply happens after testing support on a SoW. Its characteristics are a weak rally on narrow spread and low volume. The failure to rally is usually attributed to weak
demand and/or substantial supply. LPSY’s are where large operators’ distribute their remaining shares before the markdown phase begins.

SoW: Sign of weakness is a commitment below the lower boundary of the trading range, often this happens on increased spread and volume.
 SCHEMATICS
PHASE 3 – DISTRIBUTION #1
UTAD

UT TEST
BC

LPSY
ST

PSY LPSY

Copyright Wyckoff Education Ltd LPSY

AR
SoW
SoW

PHASE A PHASE B PHASE C PHASE D PHASE E

 SCHEMATICS
PHASE 3 – DISTRIBUTION #2 UT

BC
The difference between the LPSY Copyright Wyckoff Education Ltd

Distribution #1 Schematic and

Distribution #2 Schematic has to ST LPSY
do with Phase C. Instead of an
UTAD that goes above the
resistance set by the BC, and PSY LPSY
normally any UT in Phase B, an
LPSY occurs. LPSY

AR
SoW LPSY

SoW

PHASE A PHASE B PHASE C PHASE D

 TRENDING AND NON-TRENDING ENVIRONMENTS

M A R K E T S A N D S TO C K S A R E E I T H E R
I N A T R E N D I N G E N V I RO N M E N T O R
N O N - T R E N D I N G E N V I RO N M E N T

Newton's First Law of inertia is relevant when

thinking about trends and the ending of trends.
Objects will remain in their state of motion unless
a large force acts to change the motion – i.e., SC
& BC.

Change of Character (CHoCH) from the trending to non-

trending environment and visa versa happens in Phase A and
the confirmation of the CHoCH happens in Phases C and D.

“As I learned when I got down to the study of the action of the stock market as
interpretative of its future course, there is no substitute whatever for human judgement”
R D. – Wyckoff

TRENDING NON-TRENDING TRENDING NON-TRENDING TRENDING

 APPLE PRICE CYCLE
“Tape reading is the only known method of
trading which gets you in at the beginning, keeps
you posted throughout the move, and gets you
out when it has culminated” – R D. Wyckoff

Copyright Wyckoff Education Ltd

 THE 3 LAWS

“The solution to the stock market problem lies in the ability to interpret supply & demand”
L AW # 1 - S U P P LY & D E M A N D
– R D. Wyckoff

The Law of supply and demand governs future price direction. This principle is a foundational pillar to the Wyckoff method.

If demand is greater than supply, prices increase. If supply is greater than demand, prices decrease. To contextualise this, imagine being in a
live auction bidding for an item. If 15 people are bidding for the same item then prices are likely to rise much quicker, and reach much
higher prices, as opposed to 3 people bidding for the same item.

Although this Law sounds simple to understand, it is often overlooked and used incorrectly. As Wyckoff said, if one can understand supply
and demand, by comparing price and volume bars over all time frames, then successful interpretation of future price action is increased.

The following slides help explain this Law.

THE 3 LAWS - LAW #1 SUPPLY & DEMAND EXAMPLES
THE 3 LAWS - LAW #1 SUPPLY & DEMAND EXAMPLES
THE 3 LAWS - LAW #1 SUPPLY & DEMAND EXAMPLES
 THE 3 LAWS

“A study of the stock market means a study in the forces above and below the
L AW # 2 - C A U S E & E F F E C T present level of prices. Each movement has its period of preparation, execution and
termination, and the most substantial of movements are those that make the long
preparation” R D. – Wyckoff

Every cause has an effect and every effect a preceding cause. This is true in nature as well as the stock market. Therefore, in the stock
market, the larger the accumulation trading range (cause) the larger the markup phase (effect). To contextualise this, imagine a monthly chart
of stock XYZ that has been under accumulation by the Composite Operator for 5 years. The resulting price advance after conclusion of this
accumulation structure will be much greater than a small accumulation structure that formed over several days or hours on an intra-day
timescale.

Point and Figure analysis, specifically horizontal point counts that count the ‘cause’, can help determine the likely distance (effect) the price
will move. Point and Figure analysis can be used in both accumulation and distribution structures to provide upside and downside targets.
Point and Figure analysis is an advanced topic and will be covered in future courses.
 THE 3 LAWS - LAW #2 CAUSE & EFFECT EXAMPLES
+460%

Monthly Log Scaling Chart

 THE 3 LAWS

“Tape reading is an art in which one can become highly expert and more and more
L AW # 3 – E F F O RT V S R E S U LT successful as experience sharpens his instincts and judgement, and shows him what
to avoid” R D. – Wyckoff

This Law is more nuance and harder to understand due to its conflicting nature of divergences between price action and volume. A
divergence between the two can be an early signal that a change of character and change of trend is imminent – i.e., a change from a trending
to non-trending environment.

Examples of this Law on charts will be provided later in the course. For now though, imagine a stock that has been in a significant uptrend
for some time. Significant volume starts occurring yet the price makes little to no upwards progress. Therefore, large effort shown by the
volume is present, yet result (price) is showing a divergence by not increasing. This could provide an early indication that the Composite
Operator, and other larger Institutional Investors, are selling shares in anticipation for a change of trend. Of course, this Law, and no other
Law, should be viewed in isolation. Applying the whole of the methodology is necessary to understand the ‘story’ of the stock and
contextualise what has happened and likely to happen.
THE 3 LAWS - LAW #3 EFFORT VS RESULT EXAMPLE
 UNDERSTANDING MONEY ROTATION

“Judging and forecasting the stock market by its own action requires long study and
H OW T H E C O M P O S I T E O P E R ATO R
continuous practice” R D. – Wyckoff
BUYS & SELLS

The Composite Operator by their nature has to be contrarian due to their size. When purchasing stocks the two most important things they require are
1) liquidity; and 2) value. Think of Warren Buffett as a Composite Operator, and his famous quote helps emphasise this point – “be fearful when others are
greedy and greedy when others are fearful”.

The Composite Operator generally begins their campaign by purchasing shares when others (weak hands) are capitulating at the PS and SC. The
Composite Operator concludes their campaign by distributing (selling) their shares when weak hands (the public and Institutions on the wrong side of the
trade) are excited and have seen the significant uptrend the stock has had. It’s at this point the stock is commonly making ‘front page news’ and releasing
great earnings reports. Weak hands fall foul of the dangerous cognitive bias that is FOMO (fear of missing out). By desperately wanting to invest in the
stock weak hands provide the Composite Operator with the liquidity needed to exit their position without too adversely effecting the share price.

“As Charles H. Dow used to say: “The public rarely sees values until they are pointed out”, - which means the public does not lead, but is led in
speculation” – R D. Wyckoff
 UNDERSTANDING MONEY ROTATION HOW THE
COMPOSITE OPERATOR BUYS & SELLS EXAMPLES
 UNDERSTANDING MONEY ROTATION HOW THE
COMPOSITE OPERATOR BUYS & SELLS EXAMPLES
 UNDERSTANDING MONEY ROTATION HOW THE
COMPOSITE OPERATOR BUYS & SELLS EXAMPLES
 UNDERSTANDING MONEY ROTATION HOW THE
COMPOSITE OPERATOR BUYS & SELLS EXAMPLES
 SUPPORT & RESISTANCE

W H E R E TO D R AW S U P P O RT A N D
R E S I S TA N C E L I N E S

Support and resistance lines can be drawn in a linear or non-linear manner.

Linear support and resistance lines can be drawn where price failed to commit above or below specific areas. However, thinking in a
non-linear fashion when drawing support and resistance lines is required in the Wyckoff methodology. Often times, support and
resistance lines will be up-sloping or down-sloping, and areas of support and resistance should be thought of instead of a specific price
point.
SUPPORT & RESISTANCE EXAMPLES
SUPPORT & RESISTANCE EXAMPLES
SUPPORT & RESISTANCE EXAMPLES
SUPPORT & RESISTANCE EXAMPLES
 STRUCTURAL PHASE ANALYSIS – BRIEF DEFINITIONS

“Money Is made in Tape Reading by anticipating what is coming, not by

U N D E R S TA N D I N G W H E N P H A S E S B E G I N & E N D
waiting till it happens and going with the crowd” – R D. Wyckoff

Definitions for both Accumulation and Distribution Structures.

Phase A: The end of a trend.

Phase B: Building a Cause (for either accumulation or distribution).

Phase C: Testing and beginning of new trend.

Phase D: Continuation of trend.

Phase E: Prevailing force, either supply or demand, is in full control and the trend is apparent / obvious on the chart.
APPLE PRICE CYCLE FOR PHASE ANALYSIS

Copyright Wyckoff Education Ltd

 S TRUC TURAL P HAS E ANALYS IS – AC C UM ULATION DEF I NITIONS

“News is ‘news’, the recording of what has already taken place, no more, no less.
U N D E R S TA N D I N G W H E N P H A S E S B E G I N & E N D It announces the cause for the effect that has already been more or less felt in
the market. On the other hand, the tape tells the present and future of the
market” – R D. Wyckoff

Phase A: Is the stopping of the prior downtrend. Until now supply has been dominant. The
exhaustion of supply is evidenced by the PS and a SC. Widening spread and significant volume
show shares from weak hands are being transferred to strong hands (Composite Operators).
Once capitulation by the weak hands is over and supply decreases, an AR occurs fuelled by
consistent demand by institutional investors and short-covering.
A successful ST in the area of the SC will show decreased selling and a narrowing of price spread
and decreased volume. Should the ST commit below the SC, either lower lows or a prolonged
trading range is more probable. The price levels of the SC, ST and AR set the boundaries of the
trading range.
The PS, SC, AR and ST can occur without their climatic nature. However, the climatic
characteristics help add conviction and to identify that large interest have begun accumulating the
stock.
A re-accumulation trading range (examples given later) will have slightly different labelling and
Phase A will closely resemble Phase A of a distribution structure.
Phase B: Is “building a cause” for a new uptrend (Law #2 –
“Cause and Effect”). In Phase B, strong hands (CO,
institutions and large professional interests) are accumulating
relatively ‘cheap’ inventory in anticipation of the next markup.
Think of the Christmas decorations example. This
accumulation can takes years. There are usually multiple
tests in Phase B, such as STs and upthrust-type actions
(UTA). The strong hands objective is to acquire as much
stock as possible at ‘cheap’ prices before the markup phase.
As Phase B and the trading range progress the price
fluctuations (swings) should decrease in volatility as the
strong hands absorb stock. When supply is becoming
exhausted the stock is ready for Phase C testing.
 S TRUC TURAL P HAS E ANALYS IS – AC C UM ULATION DEF I NITIONS

U N D E R S TA N D I N G W H E N P H A S E S B E G I N & E N D

Phase C: The main function of Phase C is testing the remaining supply. Strong
hands do not want to ‘mark up’ the stock price only for significant supply
from weak hands to halt the price advance. Therefore, a Spring quickly
undercuts the lower boundary of the trading range to help encourage the
final weak hands to capitulate. Often this is a bear trap because traders will
initiate short positions in the expectation of the downtrend continuing.
A Spring and subsequent Test should not have a large amount of supply come
to the market. If there is, invariably further testing action is required.
Assuming a successful Spring and Test, in Wyckoff methodology, it is an
optimal place to initiate a partial position.
Phase D: Demand should be now prevailing over supply if our analysis was
correct. This can be seen by a SoS rally that advances to the top of the trading
range, committing about the most, if not all, the previous highs. The
characteristics of the rally will have widening price spreads and increased
volume. Pullbacks / reactions should have the characteristics of LPS and BU.
Phase E: The uptrend that began in Phase C and continued in Phase D now
continues and is obvious to most. Demand prevails over supply. Smaller re-
accumulation structures can provide opportunities to add to longer term
campaign positions (discussed later in the course)

Note that Wyckoff did not have a definition for a Spring, he used the term
‘Shakeout’ (SO). It was his apprentice, Bob Evans, that added the term Spring.

The appearance of a SoS shortly after a Spring or SO validates the analysis.

As noted in Accumulation Schematic #2, however, the testing of supply can
occur higher up in the trading range without a Spring or SO; when this
occurs, the identification of Phase C can be challenging.
 S TRUC TURAL P HAS E ANALYS IS – DI S TRIBUTION DEF I NITIONS
U N D E R S TA N D I N G W H E N P H A S E S B E G I N & E N D
Phase A: Marks the stopping of the prior uptrend. Demand has been in control over supply
and this is the first significant signs of supply shown by the PSY and BC. These events are
usually followed by an AR and a ST. Note that an uptrend can also end due to exhaustion of
demand.
In a re-distribution trading range (covered later in the course) within a larger downtrend,
Phase A may look more like the start of an accumulation trading range (e.g., with climactic
price and volume action to the downside). However, Phases B through E of a re-distribution
trading range can be analysed in a similar manner to the distribution trading range at the
market top.
Phase B: The function of Phase B is to build a cause in preparation for a new downtrend.
Strong hands are disposing of their shares and can be opening short positions in preparation
for the down move. This process leaves clues that the supply and demand balance has tilted
toward supply instead of demand. For instance, SoWs are usually accompanied by
significantly increased spread and volume to the downside.
Phase C: In distribution, Phase C may reveal itself via an UT or
UTAD. An UT is the opposite of a Spring. It is a price move
above the trading range resistance that quickly reverses and
closes back in the trading range. This is a test of the remaining
demand. It is also a bull trap by appearing to signal the
resumption of the uptrend but in reality its intention is to mislead
and confuse break-out traders. The UT and UTAD also enables
the Composite Operator and other large interest to sell their
remaining shares to weak hands at high prices.
If demand is weak in a distribution trading range price is unlikely
to reach the level of the BC or initial ST. In this case, Phase C's
test of demand may be represented by a UT as a lower high
within the trading range.
 S TRUC TURAL P HAS E ANALYS IS – DI S TRIBUTION DEF I NITIONS

U N D E R S TA N D I N G W H E N P H A S E S B E G I N & E N D

Phase D: Begins after the tests in Phase C and shows the last attempts of demand. During Phase D price commits below the trading range support level, usually
this will be on increased volume and spread having the characteristics of a SoW. Multiple weak rallies within Phase D, having the characteristics of an LPSY, helps
add conviction the Phase analysis is correct.

Phase E: Is the continuation of the downtrend that started in Phase C. Following the Major SoW (the breakdown below the trading range) there is often a weak
rally that fails to return back into the trading range. Phase E often has the most volatile moves to the downside. Probabilities in this Phase favour the short side.

Note that we want to be constantly vigilant for a climatic ending to Phase E to signal the start of a re-distribution or accumulation trading range.
 OPTIMAL ENTRY POINTS

W H E N TO B U Y ?

Optimal entry points are in Phase C and D:

1) Spring
6

2) Test of the Spring

5
3) Breakout of the Local Spring

4) SoS Bar in Phase D

4
5) Reversal of BU out of the Trading Range
3
6) Breakout after BU in Phase D
2

1
 OPTIMAL EXIT POINTS

W H E N TO S E L L ?
6
5
Optimal points to exit long positions are in Phase 2
A of a Distribution trading range, efficiency of
trades will be discussed in detail during the case
studies: 1 4
1) Climatic rally between PSY and BC 3

2) BC

3) Decline after BC

4) ST in Phase A

5) UT in Phase B

6) UTAD in Phase C
APPLE – ENTRIES & EXITS

Copyright Wyckoff Education Ltd

CASE STUDY #1 SLIDE 1
CASE STUDY #1 SLIDE 2
CASE STUDY #1 SLIDE 3
CASE STUDY #1 SLIDE 4
 CASE STUDY #1 SLIDE 5

ARGAN (AGX) WEEKLY CHART (LOG)

TEST #1
 TEST #1 ANSWER

ALEXION PHARMACEUTICALS (ALXN)

WEEKLY CHART (LOG)
TEST #2
 TEST #2 ANSWER

DENTSPLY SIRONA (XRAY)

WEEKLY CHART (LOG)
TEST #3
 TEST #3 ANSWER
VERTEX PHARMACEUTICALS (VRTX)
WEEKLY CHART (LOG)
TEST #4
 TEST #4 ANSWER
INVESCO DB US DOLLAR INDEX BULLISH FUND (UUP)
WEEKLY CHART (LOG)
TEST #5
 TEST #5 ANSWER
SMARSHEET (SMAR)
DAILY CHART (LOG)
QUESTIONS AND FURTHER EDUCATION

“Become one of the successful few who build stone upon stone until they have a solid foundation of
knowledge and experience which will last them all their lives. You cannot go into any phase of
endeavour and make money or become prominent ‘just like that’ – you must serve your apprenticeship”
– R D. Wyckoff

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Jack@wyckoffeducation.com