The Wykoff Method vs Common assumptions

[Wechsler]

I would like some thoughtful replies on those who are familiar with the Wykoff Method. Recently, there have been many citing the Wykoff Method for Bitcoin - that it's in accumulation mode.

I would like to forward my critique of this method, which is based on breakouts. According to the method, an uptrend with little volume is a signal for the continuation of said uptrend. This is because:

1. The lack of volume signals that whales are purposely limiting the supply and therefore forcing even small buys to have a significant influence in upwards momentum.
2. Lower supply means the thinning of sellers

Now for the counterargument. We've all heard statements like 'oh, this pump was without significant volume, therefore it is likely not to be sustainable'. The thinking behind this is

1. Big buys result in higher volume. This means more commitment in an uptrend (which is directly contradictory to the Wykoff method)
2. With Bitcoin's overall volume being very small compared to normal assets. Market manipulation often happens easily - so a breakout with low volume is easily 'painted' onto the charts. It could very well be a bull trap.

Now, it does seem that the 2nd line of thinking has been closer to what's happening compared to Wykoff's principles, or I am missing something?

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[Lontonbit]

Volume doesn’t mean shit in bitcoin

[alex-nn]

Most volume in BTC trading = OTC (Over-The-Counter Market) so don't look on small volumes on exchanges - it's not true, fake volumes.

[Alex077]

I would like some thoughtful replies on those who are familiar with the Wykoff Method. Recently, there have been many citing the Wykoff Method for Bitcoin - that it's in accumulation mode.

I would like to forward my critique of this method, which is based on breakouts. According to the method, an uptrend with little volume is a signal for the continuation of said uptrend. This is because:

1. The lack of volume signals that whales are purposely limiting the supply and therefore forcing even small buys to have a significant influence in upwards momentum.
2. Lower supply means the thinning of sellers

Now for the counterargument. We've all heard statements like 'oh, this pump was without significant volume, therefore it is likely not to be sustainable'. The thinking behind this is

1. Big buys result in higher volume. This means more commitment in an uptrend (which is directly contradictory to the Wykoff method)
2. With Bitcoin's overall volume being very small compared to normal assets. Market manipulation often happens easily - so a breakout with low volume is easily 'painted' onto the charts. It could very well be a bull trap.

Now, it does seem that the 2nd line of thinking has been closer to what's happening compared to Wykoff's principles, or I am missing something?

The Wykof method is considered one of the best methods of technical analysis on Wall Street. In addition, there is hard evidence that this method works in most cases, the only point is that it's more suitable for the stock market, which is slower than the cryptocurrency.

   

[Wechsler]

Duly noted @alex_nn.

On to the next Alex

I would like some thoughtful replies on those who are familiar with the Wykoff Method. Recently, there have been many citing the Wykoff Method for Bitcoin - that it's in accumulation mode.

I would like to forward my critique of this method, which is based on breakouts. According to the method, an uptrend with little volume is a signal for the continuation of said uptrend. This is because:

1. The lack of volume signals that whales are purposely limiting the supply and therefore forcing even small buys to have a significant influence in upwards momentum.
2. Lower supply means the thinning of sellers

Now for the counterargument. We've all heard statements like 'oh, this pump was without significant volume, therefore it is likely not to be sustainable'. The thinking behind this is

1. Big buys result in higher volume. This means more commitment in an uptrend (which is directly contradictory to the Wykoff method)
2. With Bitcoin's overall volume being very small compared to normal assets. Market manipulation often happens easily - so a breakout with low volume is easily 'painted' onto the charts. It could very well be a bull trap.

Now, it does seem that the 2nd line of thinking has been closer to what's happening compared to Wykoff's principles, or I am missing something?

The Wykof method is considered one of the best methods of technical analysis on Wall Street. In addition, there is hard evidence that this method works in most cases, the only point is that it's more suitable for the stock market, which is slower than the cryptocurrency.

   

Yes I know, but my issue with this is that low volume accompanying Phase D is a bullish signal. Read my low volume interpretations above.

[iram1011]

I don't know where you read about Wyckoff reasoning of lack of supply leading to breakouts or building a momentum. But what I have read about Wyckoff method is that a selling climax or spring should be accompanied by an increase in volume to show expanding participation. He used increased volume to confirm a reversal, breakout or a trend. As much as I have read, low volume means nothing as it shows lower buying/selling powers which are incapable of bringing any market trend. And in the highly manipulated market as that of cryptos, low volume means nothing at all.

[Wechsler]

I don't know where you read about Wyckoff reasoning of lack of supply leading to breakouts or building a momentum. But what I have read about Wyckoff method is that a selling climax or spring should be accompanied by an increase in volume to show expanding participation. He used increased volume to confirm a reversal, breakout or a trend. As much as I have read, low volume means nothing as it shows lower buying/selling powers which are incapable of bringing any market trend. And in the highly manipulated market as that of cryptos, low volume means nothing at all.

It's what they teach at university. You can listen to this lecture if you have the time and find the part where it says volume petering off means that the composite operators (whales) are trying to close off the supply, leading to a price rise. 

Which is why I think it's just not relevant to crypto but some of my mates stand by it.

[lolehiM92]

What do you know about The Wykoff Method? This rule helps traders to determine their price target by calculating the price range that can be obtained after the price breaks a certain price range. The Cause section is measured by the number of dots in the histogram