Better know a Wyckoff event - ChoCh

   It is a break of structure, no; It's an internal break of structure,  it's the inside bar that produced the break of structure, oh I got it: it is a rally that occurs on a full moon... Hopefully, in this little article, I will be able to demystify this event for you and bring some clarity. The Change of Character or ChoCh refers to the trading environment and this event marks the transition from one environment to another. I found this picture on the internet shared by Wyckoff Analytics which is a perfect example and also this is a great opportunity, for me to mention these guys because I can't recommend them enough if Wyckoff is what interests you. Also, I bet you did not know that the Wyckoff article from schoolstockcharts was put together by Roman & Bruce from Wyckoff Analytics and some charts were edited by Hank.; just saying... 

Probably one of the few schematics representations you we'll see from me; as I said before, learn Wyckoff well, understand it and you'll never have to memorize any schematics. I was going to share this one as a representation of the environment change : 
* this cycle is another one of these things too simple that we overlook but this cycle occurs on all time frames from the daily candle to the 1 min and lower.

As we can see from the first image in each schematic we have 2 Changes of Character; there will always be one in Phase A when we experience the stopping of the trend and we enter a non-trending environment and the second one after Phase C where we enter a trending environment once again and we can see the new trend emerging. The first ChoCh is represented by the rally/reaction from SC to AR or BC to AR and it will be the most significant rally/reaction against the trend. We confirm this and the stopping action with the next event, the secondary test which may come as an HL or LL test but it confirms the stopping action. The price might or might not deliver multiple PS/PSY points before the real Change of Character occurs; The Choch can also retrace 100% back to the PS/PSY or even more. 

As we can see above, all these rallies from Sc to Ar represent a ChoCh regardless of how much it retraced or how many PS points we have; even in the last scenario where the PS is missing completely we can observe a clear ChoCh; we have a rally which is the most significant rally and the secondary test confirms the stopping of the trend and concludes Phase A. While the bulk of the volume will be found around the PS and SC the rally itself in general should be done with an increase in volume and spread. 
  I want you to think about how can you implement this in your trading and think about how useful would be to know when you enter a TR or you are about to get out of one.  In other words, the first ChoCh will deliver the stopping action and set the range of your schematic and the second ChoCh serves as a timing tool for our entries where we can note that absorption has occurred and now we can see once again a new trend emerging. A very simple and yet very powerful concept. The PS/PSY ( preliminary support, and supply) are previous attempts to stop the trend which always fail.
   The second ChoCh is characterized by an increase in spread increase result and demand emerging; we should start seeing an increase in volume in rallies which produce internal breaks of structure which will deliver HH and HL with a diminishing volume signature. It will be the most significant rally since the stopping action has occurred in Phase A .

keynotes :
   * ChoCh is the transition from one environment to another and back ( trending->consolidation-  >trending )

   * ChoCh is represented on our chart by the rally from SC to AR or from BC to AR.
   * the secondary test confirms the change of character and the stopping action and concludes phase A.
   * Phase A always STOPS the trend.
    
  I feel we covered the whole Phase A with this second article since we also talked about the AR and ST and the whole phase. The Automatic Response ( AR), Rally for an accumulation and Reaction when we talk about distribution, occurs after the BC or SC and will set the maximum or minimum of the schematic. As an exercise one can go into the charts and find as many phase A as possible and study each one of them by observing the relationship between these events and volume. If you have any questions, that's what the comments are for; you can also join our Discord. (link in sidebar).

   I think that's all for now, I'm me - you're you, see you around!
Arigato! 

VSA *case study* NAS100

 We were looking in our group after that rally entered the green trading range at the fact that on this rally demand is exhausted and the whole move including the internal BOS ( break of structure)  was done with diminishing demand signature. The Bias from there was a lower low and was confirmed by the supply showing up and increasing at the end of the trading range confirming the distribution at the top of the rally. Right now we are targeting the monthly vwap, the drop in supply, and LTF structure suggest accumulation for now. 

 

Better know a Wyckoff event - BC/SC

 Buying Climax 

   A simple definition for the buying climax would be a climactic action that stops the previous uptrend. All previous attempts to stop the trend have failed ( psy -preliminary supply ) and the market delivered higher prices. This one is a stopping action and we can confirm this when it produces a ChoCh a Change of Character,  an AR (automatic reaction), and ST (secondary tests) which concludes phase A. I will say this a lot so please get used to it : 

The goal of phase A is to STOP the trend. 
Phase A always stops the trend!

   Please note that no matter what type of schematic we are looking at be it accumulation, re-accumulation, distribution, or redistribution phase A it is always the same. Starts with a stopping Action aka Buying Climax or Selling Climax. Followed by the Automatic Reaction ( or Response) and a Secondary Test which confirms the stopping action. 

  The weak hands become so excited and create such an opportunity and value for the CM/CO , in other words, a proposition "He" can't refuse, that "He" must act and "He" must act now, therefore the automatic response. The market will deliver lower prices looking for buyers and higher prices looking for sellers. In a true Zen fashion, I should just come, make that statement, snap my hand fan or clap, with one hand mind you, and then leave. But I feel since you are here you are looking for something more than that. But in the same Zen fashion, I would like to remember you of another saying. They say that when you don't know Zen, clouds are just clouds and mountains are mountains; when you start to learn zen and you start to realize certain things clouds are not just clouds anymore and mountains are not mountains, but in the end when you truly understand Zen clouds are clouds again and mountains are mountains :)   
Indeed it does not need to be complicated. Hey, some of us enjoy the journey, right? Not all that wander are lost ,I get it... ;)  
   Back to Wyckoff schematics, they can take any shape or form. Many textbook schematics are unfolding every day in the marketplace but many will look very different than your textbook type 1 or type 2 schematic. I think the most important thing is understanding the events and the anatomy of the trading range (hint hint - Jim Forte - see the library in the group) rather than memorizing schematics or in other words a pattern. Wyckoff is not a pattern although most patterns are a Wyckoff schematic. If you can do that you will never have to memorize a schematic in your life. "If"... of course, you can, the question is will you do it? 
   To summarize, the BC is a climatic run into a wall, always a stopping action that stops the previous move. This stopping action is confirmed by the following events namely, AR and ST, and will be done with decreasing volume signature. The psy and bc in most cases will have the highest volume but should be noted that a trend doesn't necessarily have to end with a climax. An uptrend could end with a SOT (shortening of the thrust), where instead of a climax we can see exhausting of the demand, decreased spread and volume, and less progress on each rally until the supply emerges producing a change of character. More about volume analysis at a later date but as an exercise one could go and look in the charts for these types of climactic actions that resulted in a trading range. any time frame, any asset. Here are a few examples : 

  

Naturally, the opposite is true for the SC (Selling Climax)

   We can also note the unusually high volume at the end of the run; a stopping action will always have that x2-x3 or more volume compared to the previous local average volume. that type of candle with that type of signature will always result in a stopping action if not reversal. We'll talk a lot more volume later.
   I think this is a good start for now; I think next We'll talk about the ChoCh which is part of phase A  and continue with AR and ST. Would really like to know if you have something to add about the Buying Climax or Something that you look for, let me know in the comments. 
I'm me, you're you, see you around. 

Nothing that needs to be said

I have nothing to sell you.
I have nothing to teach you.

….trading and investing is like any other pursuit—the longer you stay at it the more technique you acquire, and anybody who thinks he knows of a shortcut that will not involve “sweat of the brow” is sadly mistaken” - Richard Wyckoff

had to make this post as well in case one was wondering...

be like the Tao which does nothing yet leaves nothing undone. :) 

Ultimately is not that complicated; if everything you did so far was wrong the opposite must be right! 

A Wyckoff journey or something...

   It was the best of times, it was the worst of times...
   Bitcoin was hitting 600$ and I was just discovering crypto and trading; soon after the BTC run to 20K I was the greatest trader ever to walk on the face of the earth; at that time I was thinking it was all skill although what really got me into trading was this YouTuber I found, trading Ichimoku. Come to find he was Josh Olszewicz and at that time he was writing for Bitcoin Magazine, I think he still does, actually. Not that I know the guy or anything but I really enjoyed at the time his Ichimoku weekly analysis and educational videos. Ichimoku was my first love and this indicator still holds a special place in my heart.
I know, I know not a word about wyckoff... well I really love wyckoff and we will talk about it a lot,,, 
   I truly hate these opening posts, so: I am me, you're you - welcome and see you around!