Wyckoff Method and The Composite Man in Crypto Market

The Wyckoff method and composite man are very popular strategies in technical analysis. As far as technical analysis is concerned, there are so many strategies and tools that have been created to help traders take advantage of the marker movements and make more profits. The Composite Man is one of the most used in the Wyckoff method. The idea behind the composite man by Wyckoff was to create an imaginary identity of the market. In the Wyckoff theory, he proposed that traders should learn and focus on the market and treat the cryptocurrency market like a single entity that was controlling the market. With that, it would be easier to follow the cryptocurrency market trends.

In the composite man, the single entity represents the market makers or can be referred to as the big investors in the market because they have a big influence in the market. The main goals of the composite man is to enter the market and buy low and exit the market and sell high. In the composite man concept, there are four phases that make up the market cycle which are the accumulation phase, the uptrend phase, the distribution phase and the downtrend phase. These phases complete the market cycle in the Wyckoff method or theory.

Accumulation Phase

This is the first phase of the cryptocurrency market cycle. This phase is known as the accumulation phase because it is the phase where the composite man loads his bags and continues to accumulate more cryptocurrencies before the others. In this phase, the market might move horizontally or fluctuate up and down, but will mostly remain in similar price zones. As the composite man continues to accumulate gradually by buying at different price levels, the market only moves slightly.

Uptrend Phase

This is the second phase of the cryptocurrency market cycle. During the uptrend phase or bullish phase, there are more demand in the market and the selling force is suppressed which results to the price to increase. As more and more enter the market, the price continues to rise which attracts other investors which causes the market to become bullish. In the uptrend phase, the composite man is holding enough coins and is not selling, waiting for the right time to take profit. The uptrend phase might have multiple accumulations which is referred to as the re-accumulation. As price increases, earlier investors will sell off their holding, however, the high demand will suppress the selling pressure and cause the price to continue to move in an uptrend direction.

Distribution phase

This is the third phase of the cryptocurrency market cycle. In the distribution phase, the composite man has made enough profit from the increase in price, and starts to take profit by selling some of the coins. New investors buy these coins. The market is still bullish, however, the demand begins to diminish, the selling pressure from the composite man begins to suppress the demand and eventually, suppressing the demand. This causes the price to fall and the market begins to move in a downtrend.

Downtrend phase

This is the fourth and final phase of the cryptocurrency market cycle. This phase simply conforms that the market is in a downtrend or bearish. The composite man is selling his holdings to take profit, other investors sell out of FUD, and this causes the prices to continue to fall or move horizontally. This is as a result of the low volume caused by the decrease in demand. In this phase, there is also re-distribution because of the market movements and investors who think the market would begin to rise and fall into the trap. However, as the demand keeps reducing and the selling pressure continues to rise, the market continues to fall, creating multiple support levels.