Bitcoin Wyckoff Accumulation
For anyone who's been paying attention to our telegram channel, you've likely noticed quite a few individuals discussing the strong correlation between recent Bitcoin price charts and the Wyckoff Accumulation method. To be fair, I had not noticed this until it was brought to my attention, but the resemblance is difficult to challenge. The group of people that have thus far joined the Booyah Traders Telegram channel has exceeded my expectations with their breadth of knowledge and technical analysis skills. Whether you are a beginner or an advanced trader, joining this channel is an excellent way to build and hone your chart reading skillset and a place you can bounce ideas off others to get a variety of perspectives.
Wyckoff's Accumulation theory is based off three primary principles:
1) Price direction is determined by supply and demand. If there is higher demand than supply, prices increase. If there is higher supply than demand, prices decrease.
2) Accumulation and distribution within a trading range is a result of cause and effect. When prices are moving back and forth between support and resistance, higher lows tend to point towards accumulation where the price will increase. The "spring", or the point in which upward price breakout occurs is a price below support at the end of the cycle. When prices are moving back and forth between support and resistance, lower highs tend to point towards distribution. The final "spring" to send prices downward is a price point above resistance.
3) The result is a direct reflection of the effort in trading that day. Simply put, the magnitude of price change (result) is caused by the volume (effort) of trades. Large price changes require equally high volume.
Sir Baller's 4th principle for Wackoff's (hey - I'm still a kid at heart) accumulation: The whales' singular objective is to profit by taking others' money. They achieve this objective by tricking retail investors into buying or selling at the wrong time. This is why the springs break resistance and support levels before their breakouts.
Explaining Wyckoff's Accumulation theory can fill a book and leave you wishing you never found this website in the first place, so if you really want to have grey hairs by the time you finish this post, check out a more in depth description. At the very least, take a quick look at the terminology descriptions about 1/3 of the way the page when you're looking at the charts below. Taken directly from the aforementioned website, below are two charts detailing Wyckoff Events and Phases after a downtrend and uptrend, respectively.
Below are identical 4hr candle Bitcoin price charts denoted with my interpretation of where the Wyckoff Events occur, as well support and resistance lines. The first chart is a macro perspective over the entire bull run thus far. The second chart breaks every peak and trough cycle into their own Wyckoff series of events. Basically this is two ways of looking at the same problem, with neither necessarily being correct or incorrect. Please note that the final red and green arrows placed at the termination of candles does not specify the number of ups and downs before the final expected breakout.
My interpretation of these events on both charts leads to an identical style breakout in a positive price direction. However, we are in a price range where it can reverse. The last two up and downs between resistance and support lines show higher lows. This is a very good sign. If the higher lows trend continues and all of a sudden we break support, I would say we are about to see a considerable price resurgence.
These past few months has seen a substantial growth in the number of retail and institutional investors in the cryptocurrency markets. Coming from trading stocks, many investors aren't ready for the volatility associated with crypto. Not only is there a lower marketcap, resulting in large investments having great influence on price fluctuations, but crypto markets are essentially the wild west. There are no laws to stop collusion and insider trading (not that laws stop whales anyway). For this reason alone, I am a proponent of regulation in the crypto markets. Sure, the government manages to screw everything up, but the lack of regulation is currently scaring a lot of big money away. The whales won't stop cheating, but the more money that's in the pot, the less any individual whale can manipulate the prices.
These past few weeks many newer and seasoned crypto traders were shaken out by whale trickery. This is why we need to band together as retail traders and make informed decisions together. Our goal at Booyah Traders is to form social media communities where we help each other make profitable trades. Currently the Telegram page is quite busy and we have many members that have joined the Discord channel. We recently created a subreddit but have not posted much there. If people start being active on any of these lesser used platforms, we will be happy to respond and hopefully it turns into many more people being involved.
Good luck trading everyone; we hope you have your lambos soon!