AWTC (MS) - January11, 2016

Advanced Wyckoff Trading Course (AWTC)
January 11, 2016
Outline for today’s session:
1. Change of Character Concept, cont’d

2. Homework Review (HD)
3. Q&A session
4. Homework: Wyckoff Labeling
Notes:
Next webinar sessions for WYCKOFF MARKET STRUCTURE Series:

January 18 and 25 at 4:00-6:00 pm PST
All recordings and slides will be available to paid participants.
Current AWTC students should email their home works to [email protected].
Slides for this session will only be available to AWC students. Recording will be posted on
“Wyckoff Method” YouTube Chanel.
HeatMap and Research Page on www.wyckoffanalytics.com/

http://www.wyckoffanalytics.com/heat/
Password: wyckoff123
www.WyckoffAnalytics.com Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.

Disclaimer
Roman Bogomazov (“Presenter”) is not a registered investment advisor or broker-dealer and does not purport
to recommend or suggest any securities to buy or sell. You understand and acknowledge that there is a very
high degree of risk involved in trading securities. Presenter assumes no responsibility or liability for your
trading and investment results.
It should not be assumed that the methods, techniques, or indicators presented will be profitable or that they
will not result in losses. Past results of any individual trader or trading system published by Presenter are not
indicative of future returns by that trader or system, and are not indicative of future returns which will be
realized by you. In addition, the indicators, strategies, articles and all other features of Presenter's products are
provided for informational and educational purposes only and should not be construed as investment advice.
Accordingly, you should not rely solely on the Presenter’s information in making any investment. Rather, you
should use the Presenter’s information only as a starting point for doing additional independent research in
order to allow you to form your own opinion regarding investments. You should always check with your
licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN

ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND DO NOT
INCLUDE BROKERAGE AND OTHER FEES, OR SLIPPAGE. ALSO, IN SIMULATED PERFORMANCE RESULTS NO
TRADES HAVE ACTUALLY BEEN EXECUTED, AND THEREFORE THE RESULTS MAY HAVE UNDER- OR OVER-
COMPENSATED FOR THE IMPACTS OF A VARIETY OF MARKET FACTORS, SUCH AS LACK OF LIQUIDITY.
SIMULATED TRADING PROGRAMS, IN GENERAL, CAN ALSO BE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO
REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES
SIMILAR TO THOSE SHOWN.
CHoCH
CHANGE OF CHARACTER (CHoCH) CHoCH
WHEN does a trend change into consolidation?
HOW can we observe this change in environment?
Phase A Phase D
“The Creation of a Trend”
CHoCH
CHoCH
Phase A Phase D
Non-trending environment Trending environment Non-trending environment Trending

Change of Character (from trending to non-trending) – – a move (swing) Is there a Change of Character on the last reaction?
counter to a current trend with the following traits:
1. Largest counter swing move (e.g., largest reaction in uptrend)
2. Increase of price bar spreads
3. Increase of Supply
4. Break of a current trendline
5. Deterioration of Relative Strength leadership (in leading stocks)
Change of Character –
Upswing to
Consolidation
Change of Character?

Change of Character coming out of a trading range – the largest move (swing) in the direction
of a future trend with the following traits: CHoCH
1. Largest swing move within a trading range (compared to previous same-directional swings)
2. Occurrence of this move in Phase D
3. Commitment of price above/below current trading range’s resistance/support lines
4. Improvement/Deterioration of Relative Strength leadership
Change of Character
– Upswing to short-
term consolidation
Is there a Change of Character on the last

rally? How about on the last reaction?
Change of Character?

Change of Character (from trending to non-trending) – – a move (swing)
Is there a Change of Character on the last reaction?
CHoCH
Consolidation to Upswing

Change of Character coming out of a trading range – the largest move (swing) in the direction
of a future trend with the following traits:
CHoCH
1. Largest swing move within a trading range (compared to previous same-directional swings)
2. Occurrence of this move in Phase D
3. Commitment of price above/below current trading range’s resistance/support lines
4. Improvement/Deterioration of Relative Strength leadership
Upswing to short-term
Consolidation
Is there a Change of Character on the last rally?

How about on the last reaction?
Change of Character (from trending to non-trending) – – a move (swing)


Change of Character (from trending to non-trending) – – a move Do ALL of these reactions
(swing) counter to a current trend with the following traits: display a Change of Character?
5. Deterioration of Relative Strength leadership (in leading
stocks)

STOP!
Conversation:
How does a Reaccumulation trading range differ from an
Accumulation and/or Distribution trading range?

Example of short and long-term stepping stone trading ranges (AAPL)
Distinction: Identify your trading opportunity within the price cycle
Who are you as a trader? Investor, swing trader or day trader?
Based on your time frame, you need to identify your trading

opportunities within the current wave structure.
One of the best trading opportunities is to open a position in the Stepping stone REACCUMULATION TR
original accumulation trading range or in a stepping stone
reaccumulation trading range.
Stepping stone REACCUMULATION TR
Long-term stepping stone

REACCUMULATION TR after a cyclical
decline. AAPL was one of the rare stocks
Original Accumulation trading range to make a long-term higher low – a sign
of strength!

Conventional labeling of Wyckoff Reaccumulation TR:
Source: Prof. Hank Pruden Source: Jim Forte
Questions:
What is Reaccumulation? Should labeling of Wyckoff events be different for Reaccumulation vs Accumulation?

Distinction: Reaccumulation Trading Range and its characteristics
- Reaccumulation is a trading range within a continuing uptrend
- Four+ types of Reaccumulation TRs: Reaccumulation after a decline, Reaccumulation with Spring action, Reaccumulation after a shakeout, and
Reaccumulation with an uprising structure
- Reaccumulation with an uprise is the strongest and has higher highs / higher lows
- Usually, any shakeout and/or decline action before Reaccumulation will have a local smaller distribution pattern (cause and effect)
- Initial Shakeout/Decline is less pronounced during Reaccumulation than before Accumulation
- Volume: Reccumulation usually has less supply than Accumulation
-The maximum swing of TR (highest to lowest point): Reaccumulation TR is usually tighter compared with an Accumulation TR
Alternative labeling of Wyckoff Reaccumulation TRs and examples:
Source: Roman Bogomazov Source: Roman Bogomazov

Source: Roman Bogomazov Source: Roman Bogomazov
Distinction: Reaccumulation Distinction: Reaccumulation Distinction: Reaccumulation Distinction: Reaccumulation

after decline with Spring action after shakeout with uprise
- Weakest among reaccumulation - Flat or sloping down formation -Absorption of supply happens in - Strongest among reaccumulation
types - It can potentially have a few the TR without violation of types
- Decline usually starts from a lower lows with a spring being the support -This structure will exhibit higher
small local distribution pattern lowest point of the TR - Usually and depending on a highs / higher lows
- It can have different variations of - Leading stocks can exhibit short- position of the market, this - Sometimes can be confused with
the TR (see the structure of the term weakness after strength in pattern exhibits strength a topping TR
next 3 formations) this formation

Examples of stepping stone consolidation ranges (Reaccumulations)
Distinction: Reaccumulation stepping stone TR

- A Reaccumulation TR can take any form of accumulation pattern
- One can use point & figure charts as a timing tool to identify the beginning
and the end of a stepping stone trading range!
- The biggest challenge for Wyckoff students: is it reaccumulation or
distribution? The answer is in the study of price behavior as a stock starts
consolidating. (This will be covered more in future sessions.)

CHEAT SHEET
(Accumulation: Phases C, D and E)
1. INTENTIONS behind Phases C, D and E:

i. Phase C: TEST
ii. Phase D: MARKUP in TR
iii. Phase E: MARKUP outside of TR
2. WYCKOFF EVENTS:
i. Phase C: Spring/shakeout, failed spring, test of
a spring, LPS
ii. Phase D: LPS, SOS, BUC
iii. Phase E: up trend
3. SPRING:
i. Testing of Phase A and B lows
ii. Will either fail or reverse (down or up)
iii. Different types: 1-2-3
4. FAILED SPRING (Roman):

i. Spring action that fails to reach the lows of the
range
ii. This is a sign of strength!
iii. It could be also labeled as an LPS, but the
principle is that of a spring
iv. The high of AR defines the resistance line of a
trading range
5. SHAKEOUT:
i. Sharp decline on big spread and volume.
ii. Deep penetration of support level
iii. Quick recovery
iv. Requires a test to act upon
6. SOS:
i. Traveling to higher levels of the range on
bigger spread and increasing volume (usually)
ii. New higher highs, higher lows
iii. Penetration of the resistance level of a range
7. LPS:
i. Higher low
ii. Inability to go lower – SOS
iii. There could be quite a few LPS(s)
8. BUC:
i. Last big reaction before the Markup
ii. No more than 50% price reaction is preferred

CHEAT SHEET
(Accumulation: Phases A and B)
1. INTENTIONS behind Phases A and B:

i. Phase A: STOP
ii. Phase B: SUPPLY/DEMAND
2. WYCKOFF EVENTS:
i. Phase A: PS, SC, AR, ST
ii. Phase B: UT, ST and ST as SOW
3. PRELIMINARY SUPPORT:
i. First attempt to stop a decline
ii. It always fails as price goes lower to SC low
4. SELLING CLIMAX:
i. Big spread / big volume
ii. Exception 1: Contracting supply on continuous
lower SC actions
iii. Exception 2: SC ACTION can take a period of
time to develop and the lowest bar might not
be the biggest and with highest volume
IV. The low of SC defines support line of a TR
iv. AUTOMATIC RALLY:
i. It could take 1-2 days or a period of time
ii. Exhaustion of supply creates an initial rally off
SC low, which is continued later by short
covering at higher prices
iii. The high of the AR defines the resistance line of
a trading range
5. SECONDARY TEST:
i. ST can be a local event to SC+AR
ii. It can occur later as a bigger confirmation
iii. It can create a small trading range as a testing
action
iv. In Phase B, a lower ST can be interpreted as a
potential SOW which indicates more retesting
or more consolidation
6. UP THRUST:
i. NOT only in distribution! (Think
unconventionally and in terms of functionality)
ii. It leaves a trading range above resistance and
quickly comes back – failure and supply

CHEAT SHEET
(Distribution: Phases A and B)
1. INTENTIONS behind Phases A and B:

i. Phase A: STOP
ii. Phase B: SUPPLY/DEMAND
2. WYCKOFF EVENTS:
i. Phase A: PSY, BC, AR, ST
ii. Phase B: UT and SOW
3. PRELIMINARY SUPPLY:
i. First attempt to stop an advance
ii. It always fails as price goes higher to BC high
4. BUYING CLIMAX:
i. Big spread / big volume
ii. Exception1: Series of consecutive up bars, but
not necessarily on big spread and higher volume
iii. Sometimes BC action is more visible on higher
time frame (Daily-Weekly-Monthly)
iv. The high of BC defines resistance line of a
trading range
iv. AUTOMATIC REACTION:
i. It could take 1-2 days or a period of time
ii. Exhaustion of demand creates an initial decline
off BC high
iii. which is continued later by covering of long
positions at lower prices
iv. The low of AR defines the support line of a
trading range
5. SECONDARY TEST:
i. ST can be a local event to SC+AR
ii. and can occur later as a bigger confirmation
iii. It can create a small trading range as a testing
action
6. UP THRUST:
i. It leaves a trading range above resistance and
quickly comes back – failure and supply
7. MINOR SOW:
i. Indication of potential supply
ii. Possible retest of lows in the future

CHEAT SHEET
(Distribution: Phases C, D and E)
1. INTENTIONS behind Phases C, D and E:

i. Phase C: TEST
ii. Phase D: MARKDOWN in TR
iii. Phase E: MARKDOWN outside of TR
2. WYCKOFF POINTS:
i. Phase C: UTAD, Failed UT, test of UTAD, high
LPSY
ii. Phase D: LPSY, MSOW
iii. Phase E: downtrend
3. UPTHRUST AFTER DISTRIBUTION:
i. Test of the upper boundaries of a range
ii. Price travels out of the range and can stay
there for some time
iii. Draws a lot of public following
4. Test of UTAD:
i. Failed rally after UTAD
ii. It looks like a healthy pause in a rally, but fails
right afterwards
5. Failed UT (Roman):
i. Upthrust action with an intention to create
UTAD
ii. Always fails to advance above the higher range
point – SOW
iii. It can have a test as UTAD
iv. It can be also labeled as high LPSY
7. MAJOR SOW:
i. One of the characteristics for high probability
Wyckoff setup
ii. It can be identified by increasing volume,
spread, velocity and price penetration
iii. Usually will produce a new lower low
iv. It could be a second, third or fourth attempt to
break the ice and it is the most successful one
8. LPSY:
i. Failed rally and lower high
ii. Lower volume and decreasing spread
iii. It can occur at different levels in a range
signifying strength or weakness

Homework Review
Exercise:
Stock: HD
Assignment: Label Wyckoff trading ranges

HD (Home Depot), Daily (May’86 – March’87)

Phase D:
MSOS
Phase A: Phase B: Phase C: BU Phase E:
ABSORPTION AT HIGHER LEVEL REACCUMULATION TRADING RANGE
UA
SOS
UA
AR AR
ST LPS
LPS
ST SC LPS area
SC
ST of Phase B
ST as SOW
HD (Home Depot), Daily (Aug.’87 – June’88)
EXTRA STRENGTH REACCUMULATION TRADING RANGE
Phase D:
C:
Phase E:
Phase B:
SOS
Phase A:
LPS Distinction: Extra Strength

accumulation TR characteristic
Higher highs / higher lows

ST or LPS means CO can not contain the
move. There is an urgency to
accumulate.
SC,AR, ST area
HD (Home Depot), Daily (March’88 – March’89)
CONVENTIONAL REACCUMULATION TRADING RANGE
MSOS
Phase A: Phase B: Phase C: Phase D: Phase E:
UA SOS
Higher BUC
AR area
LPS
Shakeout ST
Spring
HD (Home Depot), Daily (July’89 – March’90)
EXTRA STRENGTH/ABSORPTION AT HIGHER LEVEL REACCUMULATION TRADING RANGE

Phase D:
Phase A: Phase B: Phase C:

UA
AR
LPS area
ST
SC/Shakeout
HD (Home Depot), Daily (Dec.’91 – Aug.’92)
SOS
UA
AR
LPS
ST
SC/Shakeout Failed Spring / Lower LPS

ST as a SOW – more
consolidation ahead
HD (Home Depot), WEEKLY (1992 – 1997)
MSOS
UA area
BUC area
AR
Minor BUC
Failed Spring or
ST Lower LPS
SC
HD (Home Depot), Daily (Feb.’95 – Jan.’96)
CONTINUOUS WEAKNESS REACCUMULATION TRADING RANGE
Phase A: Phase B: Phase C: Phase D:
UA area
AR SOS
Failed rally
- weakness
BUC
ST
SC
ST as a
Minor
SOW Continuous
weakness within
ST as a SOW – Continuous
more weakness weakness TR (Lower
ahead lows/lower highs in
the TR
Spring area with local TR
HD (Home Depot), Daily (May’98 – Dec.’98)
Phase A: Phase B: C: Phase D: Phase E:
SOS
UA
AR
BUC as LPS
Distinction: How to define

boundaries of a Trading Range ST
Compare volume and price spreads
for identification of the potential SC.
The first rally off the lows of SC that
will show aggressive buying off the SC
lows (“first sign of intelligent buying”)
will become AR. The boundaries of
the TR are defined by the low(s) of SC
and the high(s) of AR. Spring area
Homework:
due on January 18, 2016
1. Watch recording of January 11th session again and make NOTES
2. Exercise #1: Distribution Labeling

Assignment: Label trading ranges with Wyckoff Phases and Events AND
CHoCH going in and out of a TR
Email your home work directly to Roman at [email protected]

HOMEWORK: Examples of distribution





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Advanced Wyckoff Trading Course (AWTC)

January 11, 2016

Outline for today’s session:

1. Change of Character Concept, cont’d

Next webinar sessions for WYCKOFF MARKET STRUCTURE Series:

HeatMap and Research Page on www.wyckoffanalytics.com/

www.WyckoffAnalytics.com Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN

“The Creation of a Trend”

Non-trending environment Trending environment Non-trending environment Trending

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www.WyckoffAnalytics.com Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.

Is there a Change of Character on the last

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Is there a Change of Character on the last rally?

Change of Character (from trending to non-trending) – – a move (swing)

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www.WyckoffAnalytics.com Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.

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Distinction: Identify your trading opportunity within the price cycle

Who are you as a trader? Investor, swing trader or day trader?

Based on your time frame, you need to identify your trading

Stepping stone REACCUMULATION TR

Long-term stepping stone

www.WyckoffAnalytics.com Copyright © 2015 Wyckoff Associates, LLC. All Rights Reserved.

Source: Prof. Hank Pruden Source: Jim Forte

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Alternative labeling of Wyckoff Reaccumulation TRs and examples:

Source: Roman Bogomazov Source: Roman Bogomazov

Distinction: Reaccumulation Distinction: Reaccumulation Distinction: Reaccumulation Distinction: Reaccumulation

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Distinction: Reaccumulation stepping stone TR

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1. INTENTIONS behind Phases C, D and E:

4. FAILED SPRING (Roman):

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1. INTENTIONS behind Phases A and B:

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1. INTENTIONS behind Phases A and B:

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1. INTENTIONS behind Phases C, D and E:

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Assignment: Label Wyckoff trading ranges

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HD (Home Depot), Daily (May’86 – March’87)

Phase A: Phase B: Phase C: BU Phase E:

ABSORPTION AT HIGHER LEVEL REACCUMULATION TRADING RANGE

HD (Home Depot), Daily (Aug.’87 – June’88)

EXTRA STRENGTH REACCUMULATION TRADING RANGE

LPS Distinction: Extra Strength

Higher highs / higher lows

HD (Home Depot), Daily (March’88 – March’89)

CONVENTIONAL REACCUMULATION TRADING RANGE

HD (Home Depot), Daily (July’89 – March’90)

EXTRA STRENGTH/ABSORPTION AT HIGHER LEVEL REACCUMULATION TRADING RANGE

Phase A: Phase B: Phase C:

HD (Home Depot), Daily (Dec.’91 – Aug.’92)

CONVENTIONAL REACCUMULATION TRADING RANGE