Wyckoff Accumulation Schematic Explained - Reliance IndustriesThe Wyckoff Method is a time-tested framework that helps traders understand how smart money accumulates shares before a major price rally. Let’s break down the key events using the marked chart of Reliance Industries Limited.
📉 Phase A – Stopping the Downtrend
1. PS (Preliminary Support):
This is where big players start showing interest after a long downtrend. You’ll notice volume picks up and the price starts slowing its fall.
➤ On the chart: PS shows the first signs of buyers stepping in.
2. SC (Selling Climax):
Panic selling reaches its peak. Weak hands exit, and professionals absorb the supply. A sharp bounce follows.
➤ Big red candle with huge volume followed by a reversal – classic SC behavior.
3. AR (Automatic Rally):
With selling exhausted, the price bounces up sharply. This defines the top of the trading range.
➤ You can see this strong bounce right after the SC.
4. ST (Secondary Test):
Price comes back to test the SC zone to check if selling pressure is still strong. Low volume here means the worst is over.
➤ ST on the chart dips near the SC area but doesn’t break it with force.
🌊 Phase B – Building the Cause (Sideways Movement)
This is where the stock moves sideways within a range. Institutions quietly accumulate more without alerting the market.
5. Creek:
A resistance trendline formed by the highs within the trading range. The price will eventually need to “jump the creek” to show strength.
➤ In the chart, the Creek forms a ceiling for price action.
🌱 Phase C – Testing the Market (Spring Time)
6. Spring / Shakeout:
A fake breakdown below support to trap weak hands. Smart money uses this dip to accumulate more.
➤ Two Springs are marked on the chart, with Spring 2 acting as the final test with low volume.
🚀 Phase D – The Markup Begins
7. JAC (Jump Across the Creek):
Price breaks through the Creek with strong volume and wide candles.
➤ Shown by the steep breakout after Spring 2.
8. SOS (Sign of Strength):
Price rises rapidly with strong volume. Confidence builds among traders.
➤ Seen as a clear upward rally with big green candles.
9. LPS (Last Point of Support):
Price pulls back slightly to test old resistance (now support) with lower volume.
➤ Seen as a mild dip after the SOS.
📈 Phase E – Price Markup
This is where the real trend begins. A series of higher highs and higher lows confirm that smart money has finished accumulating, and the public starts entering.
➤ The current uptrend with bullish candles and strong momentum reflects Phase E.
✅ Summary (In Simple Words)
Preliminary Support (PS): This is the first area where we see signs of buying after a strong downtrend. It indicates that some large players might be stepping in quietly.
Selling Climax (SC): This is the panic point. The price falls sharply, and retail investors sell in fear. But this is where professionals start buying aggressively.
Automatic Rally (AR): With the panic selling done, price bounces up quickly. This bounce sets the top boundary of the trading range.
Secondary Test (ST): Price comes back down to test the SC zone. If the volume is lower and price doesn’t fall much, it confirms that selling pressure has reduced.
Spring or Shakeout: A fake breakdown below the bottom of the range. It shakes out weak hands and gives professionals a chance to buy more at lower prices.
Sign of Strength (SOS): A strong breakout above resistance, with wide price bars and good volume. This shows that demand is now in control.
Last Point of Support (LPS): A pullback after SOS, where price retests the breakout level but on low volume. This is a low-risk entry point for long positions.
Many times exact labeling is difficult, so a trader should focus more on underlying concept instead of labeling.
🧠 Key Takeaway
This schematic shows how big players accumulate quietly before driving prices higher. Recognizing this pattern early can give traders a major edge in identifying low-risk, high-reward trades.
This post is a tutorial and not a trading advise.
