Wyckoff, SMC & Price Action Models

Wyckoff laws

1. Law of supply and demand — price moves with imbalance between buyers and sellers.

2. Law of cause and effect — accumulation/distribution (cause) projects the subsequent move (effect). Larger cause → larger potential effect.

3. Law of effort vs result — compare volume (effort) to price travel (result). High effort + poor result → potential absorption / reversal pressure.

4. Composite man — useful fiction: informed participants accumulate low, distribute high, leave footprints retail misreads.

Perfect textbook Wyckoff on live charts is rare — value is in logic, not acronym-matching.

Wyckoff schematics (overview)

Accumulation model (classic)

Phase A — stopping the downtrend

• PS (preliminary support): early buying interest; momentum slows.
• SC (selling climax): often spike volume + panic selling — potential local bottom.
• AR (automatic reaction): bounce after SC.
• ST (secondary test): revisit SC area — ideally lower volume if supply is drying up.

Goal: recognize transition from bearish pressure toward balance.

Phase B — building the cause

Sideways range; composite operator accumulates; multiple tests of lows; occasional upthrusts (UT) to trap participants. Often the longest phase.

Phase C — spring (optional)

Spring: false breakdown below support to grab liquidity / run stops — low volume on the break + quick reclaim is a common tell. If no spring, another accumulation schematic can still apply.

Phase D — sign of strength

Rally after spring; SOS with supportive volume; LPS (last point of support) pullbacks on low volume into the range.

Phase E — markup

Breakout of range; trend begins; public often participates late.

Distribution model (classic)

Phase A — stopping the uptrend

• BC (buying climax): euphoria + volume surge — distribution into strength.
• AR down; ST near highs — weak volume / weak momentum suggests vulnerability.

Phase B — distribution range

Looks like consolidation; smart money unloads. Rallies sold into.

Phase C — UTAD

Upthrust after distribution: false breakout to trap late buyers — thin follow-through / reversal back into range.

Phase D — breakdown

SOW; LPS as small rallies fail; lower highs / lower lows begin.

Volumes, Wyckoff & VSA

Volume is treated as footprint of participation.

• Climax volume on a large move → potential exhaustion.
• Retest on low volume → opposing pressure may be gone.

Effort vs result again: absorption when volume is huge but price doesn't follow through.

VSA bar-level relationship: spread (range) + close location + volume.

Heuristic:

• Wide bar + high volume → strong participation (context: trend matters).
• Narrow bar + low volume → weak / indecision.

Rule of thumb: size + volume often matters more than color alone.

ICT: price delivery algorithm (PDA)

Framing: price delivery is not random — it seeks liquidity through phases such as:

• Consolidation
• Expansion
• Retracement
• Reversal

Analogous in spirit to Wyckoff-style cycles.

SIBI (ICT): sell-side imbalance / buy-side inefficiency — same imbalance family discussed elsewhere.

PO3 (power of three)

Three phases within a session / range:

1. Accumulation — range, equal highs/lows, liquidity building.
2. Manipulation — sweep / false move to induce the wrong side.
3. Distribution / expansion — real directional delivery toward premium/discount targets.

Can be bullish or bearish depending on sweep direction. Nested idea: a smaller "3 drives" can exist inside an opposite HTF PO3.

Liquidity curves

From HTF map: primary pools, dealing range, directional bias. A liquidity curve is the path between pools as price delivers.

Bearish curve (narrative): climb mitigates demand along the way so the eventual drop has fewer "unfilled" buyers underneath. Bullish curve: inverse with supply.

Range validity (ICT-style note): some traders want price to trade into equilibrium (~50%) of the range to prove balance; if it never does, imbalance may favor breakout.

"Mashup": PO3 + liquidity curves

PO3 gives story; liquidity curve gives map of likely draws.

Recap checklist:

1. Identify PO3 phases on HTF.
2. Mark range boundaries.
3. Map liquidity curve on LTF — pools, swings, OBs.
4. Watch mitigation of opposing zones during manipulation.
5. Align expansion targets with curve + HTF PO3 phase.

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Educational content — not personalized financial advice.