Wyckoff Analysis (WA) goals to perceive why costs of shares and different market gadgets transfer due to provide and demand dynamics. It sometimes is utilized to any freely traded market the place bigger or institutional merchants function (commodities, bonds, currencies, and many others.). In this text we’ll apply WA to the cryptocurrency Storj ($STORJ) to make a forecast for approximate future occasions.
Storj Price Data from MEXC Futures | Source: STORJUSDT.P on tradingview.com.
Link to the uncooked picture: https://www.tradingview.com/x/BGsOkzGM
Storj is at the moment in Phase E of a Wyckoff Distribution Schematic #1. InventoryCharts says this about Phase E of their article on the Wyckoff Method:
Phase E depicts the unfolding of the downtrend; the inventory leaves the TR and provide is in management. Once TR assist is damaged on a serious SOW, this breakdown is usually examined with a rally that fails at or close to assist. This additionally represents a high-probability alternative to promote brief. Subsequent rallies in the course of the markdown are often feeble. Traders who’ve taken brief positions can path their stops as value declines. After a big down-move, climactic motion could sign the start of a re-distribution TR or of accumulation.
The buying and selling vary for Storj was $1 – $1.12 and it has concretely fallen beneath that. From the image beneath a serious SOW has occurred, extra so pointing to a Distribution occurring. This additionally coincides with our analyst’s Elliott Wave (EWT) view on Storj. They predict a small rally as Storj continues to fall in its Wave 2. The majority of the liquidity (per its related Volume Profile) is between the 38.2% and 61.8% LFR at $0.56 and $0.76 respectively. A liquidity cluster is often anticipated between these LFRs in EWT main us to the suppose a Wave 2 correction is going on. Additionally, the cluster is within the value vary of the subwave 4, an EWT guideline.
Storj Price Data from MEXC Futures | Source: STORJUSDT.P on tradingview.com.
Link to the uncooked picture: https://www.tradingview.com/x/dD8hv9Aj
Below is the standard schematic for a Wyckoff Distribution Schematic #1.
Wyckoff Distribution Schematic #1 | Source: StockCharts.com
Glossary
All quotes are from the primary hyperlink in Supplemental Reading.
Preliminary Supply (PSY) – “where large interests begin to unload shares in quantity after a pronounced up-move”
Buying Climax (BC) – massive operators promoting their shares whereas the general public buys them at a premium throughout a interval of giant demand
Automatic Reaction (AR) – “With intense buying substantially diminished after the BC and heavy supply continuing, an AR takes place”
Secondary Test (ST) – when “price revisits the area of the SC to test the supply/demand balance at these levels”
Upthrust After Distribution (UTAD) – “a definitive test of new demand after a breakout above TR resistance”
Test – the place bigger merchants “test the market for supply throughout a TR”
Sign of Weakness (SoW) – “a down-move to (or slightly past) the lower boundary of the TR, usually occurring on increased spread and volume”
Last Point of Supply (LPSY) – “exhaustion of demand and the last waves of large operators’ distribution before markdown begins in earnest”
Elliott Wave Theory (EWT)
“A theory in technical analysis that attributes wave-like price patterns, identified at various scales, to trader psychology and investor sentiment.”
Source: “Elliott Wave Theory: What It Is and How to Use It” by James Chen (2023)
Logarithmic Fibonacci Retracement (LFR) – A measured correction at sure Fibonacci ratios on a semi-log scale.
Logarithmic Fibonacci Extensions (LFE) – A measured rally at sure Fibonacci ratios on a semi-log scale.
Supplemental Reading
“The Wyckoff Method: A Tutorial” by Bogomazov & Lipsett
“Reaccumulation Review” by Bruce Fraser (2018)
“Jumping the Creek: A Review” by Bruce Fraser (2018)
“Distribution Review” by Bruce Fraser (2018)
“Introduction to Point & Figure Charts” from InventoryCharts
“P&F Price Objectives: Horizontal Counts” from InventoryCharts
“The Wyckoff Methodology in Depth” by Rubén Villahermosa (2019)
“Wyckoff 2.0: Structures, Volume Profile and Order Flow” by Rubén Villahermosa (2021)
“Elliott Wave Principle – Key To Market Behavior” by Frost & Prechter (2022)
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