Overconfident Bitcoin (BTC) bulls would need to battle more than just Elon Musk as a price prediction model — created by technical analyst pioneer Richard Wyckoff more than 100 years ago — also goes against their wild upside predictions.
Dubbed as Wyckoff Method, the model involves a five-phase approach to determine price trends that majorly involve investors’ psychological reaction to an asset’s supply and demand.
For example, in the case of accumulation, when an asset tends to bottom out following sharp price moves downhill, the five phases in order include Selling Climax (SC), Successful Secondary Test (ST), Last Point of Support (LPS), Sign of Strength (SOS), and “stepping stones” — that signifies more demand for the asset.
Wyckoff events and phases during accumulation. Source: Stockcharts.com
On the other hand, the Distribution case appears like a 180-degree version of the Accumulation case, consisting of five phases that follow a strong price trend upward.
Wyckoff events and phases during distribution. Source: Stockcharts.com
The Preliminary Supply (PSY)