 is the Bitcoin market being manipulated? That is the question that a lot of people have had since the massive drop last month. All of a sudden out of nowhere, I was getting hundreds of messages from you guys about the Wycoff method. So today, I will be going over what the Wycoff method is, how the Wycoff method is used, and show you guys a couple ideas for both a Bitcoin accumulation phase going on right now or a possible distribution phase going on right now. I will draw both of these out for you and we will just have to wait and see which one plays out. All that and more guys coming up, you don't want to miss this. Hey, what's up, Jay here and welcome to Bitcoin Daily bringing you guys the best tips, tutorials, and ideas to help you guys become profitable and successful investors. The goal of this channel as always is to empower you guys, the people, the community, with the knowledge and resources to take you up to that next level when it comes to investing. So guys, make sure to smash the like button. If you guys are new here, don't forget to subscribe and turn on the notification bell. Let's jump right in. So what is the Wycoff method? The Wycoff method was developed by Richard Wycoff in their early 1930s. It consists of a series of principles and strategies initially designed for traders and investors. While the Wycoff method was originally focused on stocks, it now applies to all sorts of financial markets. So today, we're going to talk about the three fundamental laws of the Wycoff method. We're going to talk about the composite man concept. We're going to talk about the Wycoff schematics and the five step approach to the market. So the first law of the Wycoff method is the law of supply and demand. The law states that prices rise when demand is greater than supply. And of course they drop when the opposite is true. So this is one of the most basic principles overall in the financial markets. So this basically goes to anything when it comes to investing. If demand is greater than supply, prices rise. If demand is lower than supply, then prices drop. Simple enough. The second law is the law of cause and effect. The second law states that the differences between supply and demand are not random. Instead, they come after periods of preparation as a result of specific events. Wycoff applied a unique charting technique to estimate the potential effects of a cause. He created methods of defining trading targets based on the periods of accumulation and distribution. The third law is the law of effort versus result. The third Wycoff law states that the changes in an asset's price are a result of an effort which is represented by the trading volume. If price action is in harmony with the volume, there is a good chance that the trend will continue. But if the volume and price diverge significantly, the market trend is likely to stop or change direction. Next, let's talk about the composite man concept. Wycoff created the idea of the composite man as an imaginary identity of the market. Wycoff proposed that investors and traders should study the stock market as if a single entity was controlling it. In essence, the composite man represents the biggest players and market makers in the game, such as wealthy individuals and institutional investors. The composite man's behavior is the opposite of the majority of retail investors, which Wycoff often observed losing money. But according to Wycoff, the composite man uses a somewhat predictable strategy from which investors can learn from. Let's use the composite man concept to illustrate a simplified market cycle. Such a cycle consists of four main phases, accumulation, uptrend, distribution, and downtrend. In accumulation, the composite man accumulates assets before most investors. This phase is usually marked by a sideways movement. Once the composite man is holding enough shares and the selling force is depleted, he starts pushing the market up. Of course, the emerging trend attracts more investors, causing demand to increase. During any uptrend, there's always multiple phases of accumulation during the uptrend. We may call them re-accumulation phases, where the bigger trend stops and consolidates for a while before continuing its upward movement. As the market moves up, other investors are encouraged to buy. Eventually, even the general public becomes excited enough to get involved. At this point, demand is excessively higher than supply. Next, the composite man starts distributing his holdings. He sells his profitable positions to those entering the market at a late stage. Typically, the distribution phase is marked by a sideways movement that absorbs demand until it's exhausted. Soon after the distribution phase, the market starts reverting to the downside. In other words, after the composite man is done selling a good amount of his shares, he starts pushing the market down. Eventually, the supply becomes much greater than demand and the downtrend is established. Similar to the uptrend, the downtrend may have redistribution phases. These include the debt cap bounces or the so-called bull traps, where the buyers get trapped hoping for a trend reversal that doesn't happen. When the bearish trend is finally over, a new accumulation phase begins. So next, let's talk about the Wyckoff Schematics. This is definitely the most popular part of Wyckoff's work. Here, you can see the chart below that you've probably been seeing around for the last month or so. What these models here do is that they break down the accumulation and distribution phases into smaller sections. The sections are then divided into five different phases, A through E, along with different events which happen during these phases. So first, let's talk about the accumulation schematic. As you can see here on this picture, we first have phase A. In phase A, this is coming off a selloff. As you can see, the selling force decreases and the downtrend starts to slow down. The preliminary support, which is marked by PS indicates that some buyers are showing up but still not enough to stop the downward move. Next is the selling climax. The selling climax is formed by intense selling activity as investors capitulate. This is often a point of high volatility where panic selling creates big candlesticks and wicks. Does that sound familiar? The strong drop quickly reverts into a bounce or automatic rally, which is marked by the AR. In general, the trading range of an accumulation schematic is defined by the space between the selling climax low and automatic rally high. The secondary test happens when the market drops near the selling climax region. This test, whether the downtrend is really over or not. At this point, the trading volume and market volatility tend to be lower. Phase B is essentially the consolidation phase. This is where the composite man accumulates his shares. During this trend, the price will test both the resistance and support levels of the trading range. There could be numerous secondary tests during this phase. Then we enter phase C. And as you can see here, there's something called the spring in this phase. The spring usually breaks the support levels to stop out traders and misled investors. This is the final attempt to buy shares at a lower price before the uptrend begins. This bear trap induces retail investors to give up their holdings and sell in panic at a loss. Enter phase D. Typically, phase D shows a significant increase in trading volume and volatility. It usually has a last point of support marked here by LPS making a higher low before the market continues up higher. This often precedes a breakout of the resistance levels, which in turn creates higher highs. This indicates signs of strength. Previous resistance then becomes a support level. And last but not least, we have phase E. Phase E is marked by the breakout out of the trading range of the accumulation phase. This is when the uptrend starts. Now let's look at an example of an accumulation schematic in the Bitcoin chart right now. So looking at this chart here, we're looking at this on the four hour timeframe on Bitcoin right now. We've marked all the different phases here. And as you can see, this has not yet completed. But this is what could potentially happen if it follows the accumulation schematic here. So you see here is the preliminary support where when we were coming from the drop, then we had the selling climax when we hit 30,000. And of course, the automatic rally, which instantly took us right back from 30,000 all the way to $42,000. Then we had the secondary test here, right from the automatic rally, we started to kind of go back down. And we had a few different secondary tests where we tested the bottom of this trading range. Then from the secondary tests, we dropped, we went back up and tested the top of the trading range. And we continue to consolidate in this range as volume fell off so did volatility currently from looking at the price and from the way I drew this schematic, we are in phase C in phase C. Of course, there's the spring in order for phase C to play out, we would have to go below the support. So we would have to go just below $30,000 to cause the ultimate panic in the market, make retail investors sell their positions at a loss, make them panic sell, basically stop out traders and misled investors before then getting a bounce up off the spring. So if this scenario plays out, that means that potentially we will be going under $30,000 before seeing that move back up in phase D. Then we have the last point of support where we start going right back up from the lows and break the previous trading range resistances here. We continue to get higher lows and we see signs of strength here as we break out of previous resistance, use it as support and then go into phase E where we continue up and start the new uptrend. So that's a potential accumulation schematic there that I just showed you. Next, we're going to jump into the distribution schematic and show you guys that example on the chart as well. Alrighty guys, next, we're about to jump into the distribution schematics. Now, this basically works as the opposite of the accumulation schematics. We're going to go over all the different phases and terminologies and then show you a real life example that's on the chart right now with this schematic. Before we do that guys, if you're enjoying this video so far, make sure to smash the like button guys and don't forget if you guys are new here on this channel, make sure to subscribe and turn on that notification bell. Let's all go ahead and smash the like button together on the count of three so that we can hopefully be in the accumulation schematic and not the distribution. So let's go ahead and do it guys. The more likes we get than the higher the probability of us being in accumulation versus distribution. So let's go guys one, two, three, bold. The distribution schematics works in the opposite way of the accumulation schematic but with slightly different terminology. The first phase, phase A here starts when an established uptrend starts to slow down due to decreasing demand. The preliminary supply suggests that the selling force is showing up although still not strong enough to stop the upward movement. The buying climax here is then formed by an intense buying activity. This is usually caused by inexperienced traders that buy out of emotion or as we like to call it, FOMO. The strong move up then causes an automatic reaction. This happens as the excessive demand is absorbed by the market makers. This is when the composite man starts distributing his holdings to the late buyers. After that in most cases there will be a secondary test as we retest the previous buying area. Then enter phase B. Phase B of the distribution schematics acts as a consolidation zone here. During this phase the composite man gradually sells his assets, absorbing and weakening the market demand. Usually both the support and resistances in this training range are both tested multiple times over. After consolidation then we enter into phase C. In some cases the market will present one last bull trap after the consolidation period. It's called UTA D or upthrust after distribution. It's basically the opposite of the accumulation spring. After phase C here then we start to see the price decline and enter into phase D. This usually has a last point of supply and we start seeing lower highs here. From this point new last point of supply can be created multiple times over as it creates lower and lower highs. Then we see the sign of weakness here as we break below the training range here. This takes us into phase E. The last stage of a distribution marks the beginning of a downtrend. This is marked by an evident break below the training range. This is caused by a strong dominance of supply over demand. Remember cause and effect. Just like we did with the accumulation schematics, now we're going to look at an example of the distribution schematics on the Bitcoin chart right now. Here we're looking at the Bitcoin chart in the daily time frame. In phase A you can see here the preliminary supply and then the buying climax before getting the automatic reaction here dropping us back down. After the automatic reaction here we bounce back and have a secondary test here. After the automatic reaction we bounce back up from support and have a secondary test near the buying climax zone. In some cases like we saw here we have a UT that's called an upthrust which goes beyond the buying climax price. After bouncing around for a while here in the distribution consolidation phase then we get one last push to the upside. Remember that in phase B here this is when the composite man is selling his assets gradually which means the the market just kind of bounces around for a little bit which then takes us into phase C. This marks our all-time high here in Bitcoin as we hit phase C which is the upthrust after distribution phase. After we hit phase C is when we basically just started seeing a bunch of red here and dropped all the way back down from $65,000 to about $47,000. This took us into phase D where we saw signs of weakness in the market here. We got to bounce here from the bottom of the trading range to the top for a last point of supply. Then after getting rejected again at $60,000 we went all the way back down showing signs of weakness yet again bringing us to where we are today which can be taken as phase E. Phase E remember is what marks the beginning of the downtrend. All right guys so now we've gone over both the accumulation schematics and distribution schematics so now you're probably wondering you know does the Wycoff method actually work. Naturally the market doesn't always follow these models accurately. In practice the accumulation and distribution schematics can occur in varying ways. For example some situations could have a phase B lasting much longer than expected or sometimes the spring or the UTA D test may be totally absent. Still Wycoff's work offers a wide range of reliable techniques which are based on his many theories and principles. The accumulation and distribution schematics may come in handy when trying to understand the common cycles of the financial markets. When using any of these schematics you should always take into consideration Wycoff's five step approach. Step one determine the trend. What's the current trend and where is it likely to go? How's the relationship between supply and demand? Step two determine the asset strength. Step three look for assets with sufficient cause. Remember cause and effect. Step four determine how likely is the move. Is the asset ready to move? What's the position within the bigger trend? What do price and volume suggest? What's the price action telling you? What are the different patterns showing up in the chart? How does it look on different time frames? What are technical tools telling you? Where are the moving averages? There's a lot of different stuff. This is where you start to build your story here and put the pieces of the puzzle together and step five time your entry. Timing is probably the most difficult thing in trading. That's why I always advise people to try to dollar cost average versus try to find the perfect timing for your entry. So in essence the Wycoff method allows investors to make more logical decisions rather than making decisions based on emotions. The Wycoff method provides traders and investors a series of tools to reduce the risk and increase their chances of success. Still there is no foolproof system or technique when it comes to investing. So you should always be wary of the risk especially when it comes to the highly volatile cryptocurrency market. So I hope you guys have enjoyed this video. I hope I answered the many many questions I kept receiving. I've been receiving about the Wycoff method. Hopefully you have a better understanding now and this can help you to make better decisions as you continue to invest and become a better trader overall. Now I know you guys are probably wondering which phase which schematic are we in right now. And I showed you guys two different scenarios right. I always try to look for both a bullish scenario and a bearish scenario and then we have to kind of try to figure it out from there. So on the daily timeframe right now we have the bearish scenario which is a distribution schematic. If this ends up playing out that means that we might test a price under 28,000 maybe towards the 24 to 20,000 dollar range. However I've also been following this bullish scenario which will mark the end of the current downtrend. Now this is on a shorter timeframe. This is on the four hour timeframe versus the distribution schematic which is on the daily timeframe. So in this scenario it would mean that we're currently in phase C and we'd possibly be testing 30k or lower before springing back up here. Now which one will play out here? I wish I had the answer but only time can tell. All you guys can do is play these levels here. So what I'll probably be doing is possibly looking for a short-term trade positions to short Bitcoin below 30 with a tight stop above 30 in case of a fake out here. However I will also be adding on to my long-term positions at 30,000 dollars and if we continue lower I will also be adding on and I'll continue to dollar cost average on the way down even if we start going into a downtrend. And if we get this pop back up then I'll be prepared by dollar cost averaging on these lows down here and I'll stop out of my short-term trades here above 30,000 and I'll ride those positions that a dollar cost averaged up to the new uptrend here. Remember that the best investors make money on both sides. So thank you guys so much for watching this video. If you made it up to this point I appreciate you. You guys are the best. Make sure to smash that like button if you haven't yet. If you enjoyed the video of course. If you did not like this video then click on the dislike button twice. If you guys are new to the channel don't forget to subscribe. Turn on the notification bell. We post videos Mondays through Fridays. We do live streams. We do it all. This video has been long enough so I am out of here. Thank you guys. Peace and love.