Market cycle

BTCUSD Weekly Chart

TOPGLOV Weekly Chart

Market tends to move in cycle typically moving from accumulation, advance, distribution to decline phase then back to accumulation phase. 

1. Accumulation phase: Market moves sideways usually in a narrow trading range during an accumulation phase. Typically news are very negative and there is little interest in the market during this period.

2. Advance phase: Market transition to the advance phase when price breaks above the trading range. Market moves higher during the advance phase with profit taking along the way until it reaches a peak. Positive news start to appear during this period.

3. Distribution phase: Market transition to distribution phase when price starts to move sideways again but this time usually within a wider trading range. News continue to be positive during this period and typically more rosy than during the advance phase!

4. Decline phase: Market transition to decline phase when price breaks below the trading range. Market moves lower during the decline phase with corrective rally along the way until it bottoms out. Negative news start to appear during this period. Market then moves sideways and the cycle starts all over again.

Good examples of market cycle in action can be seen in the BTCUSD and TOPGLOV weekly charts above. 

What do we do with this information? We use it to time our market entry and exit. The ideal time to enter the market is when it is about to transition from accumulation to advance phase, and, the ideal time to exit the market is before it transition from distribution to decline phase. 

Is it easy to do? No because it is not easy to tell when the market is transitioning from one phase to the other. It is easy after the fact but not easy before the fact. There are technical clues, which can point out to us what is likely, but there are no guarantee!

Disclaimer: 

Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and any information presented in this blog.