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Rachel Welch

07 November 2022 183 Read Crypto

Wyckoff Theory

In the crypto market, the Wyckoff Theory reveals the timing of price changes. By looking at a crypto’s high and low, we can find out when to buy or sell a crypto. The high marks the buying climax, while the lows mark the selling climax. Using this theory, you can identify accumulators of stocks on the cusp of a trend change. This process is akin to planting seeds - a change in price rarely happens from thin air. There must be a cause, a trading period within a tight range, and an eventual decline in price.

Wyckoff Theory is based on the Price Cycles of stocks, which were developed by Richard D. Wyckoff in the 1930s. The price moves that occur are never the same. Each market has its own mindset, creating different patterns. The price moves are important because of how they compare to previous price behavior. For example, a price move in a Spring pattern will break a ranging channel and move in a direction opposite to its previous one. In most cases, a false break appears during low volumes and will often reverse before it can continue to the next stage. Authentic breakouts, on the other hand, will appear on increasing trading volumes.