This is Wyckoff Accumulation Schematic analysis RPL daily chart. I tried to put some explanation in the chart itself so that it will be easy to understand, but each phase is explained in detailed in this post. Wyakoff defines a laundry-load list of terms which you need to understand before following this! Please keep this link handy to refer to the terms and their definations.
Phase - A: Here supply is more then demand so price is moving down. After a lengthy down move, wide spread candles and big volumes represent that down move is reaching Selling Climax (SC) and the panic selling is ON. This panic selling is mostly absorbed by the professional traders. In RPL, selling stops at 69.75 level (10/27/2008). Automatic Rally (AR) comes up as the professional traders start showing some interest, so short covering or a weak rally starts with low volumes compared to the down fall. RPL reached 97.4 levels in this Automatic Rally (11/05/2008). Now, high of AR at 97.4 acts the resistance level and low of SC at 69.75 acts as support level. This becomes Trading Range (TR). When AR reaches climax, price again starts moving down with low volumes and small spread and retests the SC to test the balance in the “demand and supply”, which is called Secondary Test (ST) of the SC. RPL did Secondary Test at 68.25 (11/20/2008). In this down move to ST, I feel low volumes are compulsory because of diminished supply. If supply is high then it’s just a retracement not Secondary test.
Phase - B: Price moves into trading range with higher volumes compared to the down move (SC) as demand increases. Due to this “Cause”, Effect is price moves up and the spread is high. Effect is proportional to Cause. If Cause is high then we see big spreads and high volumes, which give the fast up moves. Due to high Effort (Volumes) Price reaches the resistance levels. Here RPL reaches 94.15 levels (12/22/2008). We can see shooting star, which is bearish signal and the high volumes indicate supply is more. When supply again increases and the price starts moving down. Price mostly moves in the trading range in this phase.
Phase - C: Spring (nothing but bear trap) occurs as prices moves down breaking the previous support on the low spread and volumes. Here we can see 2 bars (2nd and 3rd March 2009) with low spread and high volumes. This is an indication of the absorption of supply going to strong hands, or composite man is accumulating the huge sell-off. Next comes the wide spread red bar (3/5/2009) with comparatively low volumes and the Reaction Bar with low of 68.5 (3/6/09), which is lowest point of the spring. When the retest is done and price retraces into TR, the price starts moving up with comparatively higher spreads and high volumes.
Phase - D: Price starts moving towards Creek and breaks through it with higher spread and volumes. RPL broke out at 99 (4/1/09) and the gap up on next day indicates higher demand, with moderately higher spread and volumes. Here we got green candles with wide spread and high volumes compared to red candles spread and volumes.
Hopefully we may see some up move in this scrip from here.
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