EURUSD Wyckoff Pattern

8 sept. 2023

EURUSD Wyckoff Pattern

EURUSD - H1 Chart - Wyckoff Pattern in Accumulation Phase

1. Preliminary Support (PS)
Preliminary Support or PS is a support level that forms after a significant fall in market prices. It’s caused by Big Institutional Players and Smart money traders, when they try to acquire bullish positions after a strong selloff. In the image, you can notice that after a Sharp fall, the price action bounced back and moved sideways – That’s the example of Preliminary Support

Once a Preliminary Support is established, Market will find it very hard to break that support level because of Strong buying interest.

2. Selling Climax (SC)
Selling Climax is another pattern in Accumulation phase characterized by sharp selloff. It takes place before the Preliminary Support or PS. It indicates that selling pressure has reached a stage in which panic selling by the public will be absorbed by Big Institutional players or Smart money traders.

Selling Climax often coincides with bad news or some negative events, as it is caused by the panic selling behavior of public Investors. Big players often use the Selling Climax to acquire positions at lower price. In the Image, you can see the example of Selling Climax Pattern.

The bounce back in market prices followed by Selling climax reflects the buying interest of Big Players.

3. Automatic Rally (AR)
Automatic Rally is an up move that forms after the Selling Climax in the Accumulation phase. The underlying buying interest cause the prices to rally higher, but quickly prices will fall back after making a new high. The highest point of this rally will become the Resistance of the Accumulation range. You can see the example of Automatic Rally or AR in the Image.

After an Automatic Rally, Intense selling activity from the Public decreases and bearish sentiment becomes weaker.

4. Secondary Test (ST)
The Secondary Test formation happens after an Automatic Rally. It’s caused by the long covering process of Public Investors, which brings the price back to the area of Preliminary Support. Often prices will bounce back after touching the Preliminary Support indicating the presence of Buying Interest.

Secondary Test is a reflection that market prices have found the bottom. It is common to have Multiple Secondary Tests, as the market will retest the Preliminary Support to check the strength of Buyers. In the Image, you can see the examples of Secondary test.

5. Springs
Springs are nothing but shakeouts that happens within the Accumulation phase. The prices will fall below the Preliminary Support of the trading range only to reverse back above the trading range within a short time period. (Often referred as False Breakout)

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8 sept. 2023

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13 sept. 2023

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