8 Phases of Market Cycle

You Must have heard about the 4 Phases of Market Cycle < Accumulation, Uptrend, Distribution & Downtrend > But let me breakdown these 4 Phases into 8 for better understanding of Market Cycle. [𝘉𝘰𝘰𝘬𝘮𝘢𝘳𝘬 𝘵𝘩𝘪𝘴 𝘱𝘰𝘴𝘵 𝘧𝘰𝘳 𝘧𝘶𝘵𝘶𝘳𝘦]

1) Accumulation Phase : During this phase, prices are relatively low and stable after a downtrend. Price is boring and keeps ranging for weeks and month. Experienced investors and smart money start accumulating gradually to avoid price spikes, Retail investors are less involved due uninteresting market and due to Fear of market falling further. This phase can be recognized if price is Trading Inside a range or forming any reversal patterns like Double Bottoms. Technical indicators are often Oversold in this area & Negative news have little to no impact on the prices as sell pressure is absorbed by the smart money. 2) Bullish Transition Phase: This phase is a transition from Accumulation to an Uptrend. Prices start moving up slowly, after breaking the downwards Market structure & starts slowly heading upwards but it's typically a slow and unexciting phase. This is also the best time to look for buying opportunities.

3) Uptrend or Markup Phase: During the uptrend, prices consistently climbs up , forming higher highs and higher lows. As the market attracts more participants, Positive sentiment starts increasing with bullish news having a good impact on the price. 4) Bullish Acceleration Phase: In this phase price moves too quick in a very short period of time, often driven by extreme excitement and greed. This phase price enters parabola. 'Dips are eaten up quickly' and Technical indicators start entering the OverBought zone. 5) Distribution Phase: In this phase, Initial investors who bought during accumulation phase - start selling to secure profits. Prices become unstable, choppy or range-bound , and even positive news has minimal impact on the price. Retails are actively involved in this area. Reversal patterns like Inverse Head and Shoulders, double top, breakdown of 200 MA might indicate a potential trend shift. 6) Bearish Transition Phase: This is a transition phase where New Buyers (Mostly Retails) fail to absorb the selling pressure from the early investors/ smart money who bought during the accumulation phase. Price transitions from Uptrend to a Downtrend by breaking the bullish market structure. This is also the best time to sell & take profits.

@thescalpingpro