Wyckoff Cycle Basics

The classic Wyckoff cycle breaks a market into four structural phases:

1. Accumulation

After a major decline, strong hands quietly accumulate from weak hands. Price usually chops in a range. Sentiment: fear, exhaustion, boredom.

2. Markup

Demand overwhelms supply. Price starts a clear uptrend with higher highs and higher lows. Sentiment improves from hope → optimism → belief.

3. Distribution

Smart money distributes (sells) into strength near or after big rallies. Price may form a choppy top or sideways range at elevated levels. Sentiment: complacency, euphoria, “this can’t go down.”

4. Markdown

Supply overwhelms demand. The trend turns down and rallies are sold. Sentiment: anxiety, fear, capitulation, blame, despair.

CycleGuard overlays this structure with an estimated dominant emotion so you can quickly see where we are in the story.

Entries & Exits (Educational Only)

Below are educational guardrails often used with Wyckoff cycles. They are not recommendations.

Potential Entry Zones

• Early Accumulation (primary “sweet spot”)
  - Market has already gone through a major Markdown / bear phase.
  - Selling pressure slows; price trades in a range instead of free-fall.
  - Sentiment is fearful, exhausted, or bored.
  Idea: long-term investors often like to build positions here.
• Late Markdown → Early Accumulation
  - New lows show weaker follow-through.
  - Big down days get stronger rebounds.
  - Selling looks tired instead of aggressive.
  Idea: scale in gradually (e.g. DCA) with strict risk limits.
• Late Accumulation / Early Markup
  - Breakout above the Accumulation range.
  - Higher highs and higher lows begin.
  - Sentiment shifts from despair → cautious optimism.
  Tradeoff: more confirmation, less favorable pricing.

Potential Exit / Profit Zones

• Distribution (early & late)
  - Momentum slows after a big uptrend.
  - Rallies stall near prior highs or form choppy tops.
  - Sentiment is euphoric or complacent; FOMO is high.
  Idea: de-risk, scale out, tighten stops.
• Early Markdown
  - Trend has turned down; rallies get sold quickly.
  - Sentiment shifts to anxiety and fear.
  Idea: focus on capital preservation if you stayed in too long.

Late/vertical parts of Markup (“blow-off” moves) are typically high risk for new entries, because even small bad news can trigger violent reversals.

Risk Zones & Crowd Emotions

CycleGuard’s emotion labels hint at crowd psychology. Some emotions are associated with potential opportunity, others with elevated risk:

Opportunity-Heavy Emotions

• Fear / Capitulation / Despair – often late Markdown / early Accumulation.
• Boredom / Apathy – markets forgotten by the crowd, frequently in quiet Accumulation.

Risk-Heavy Emotions

• Euphoria / Complacency
  - “It only goes up” narratives.
  - Common near Distribution tops and late Markup.
• Anxiety / Denial
  - “It’s just a small dip, it’ll bounce.”
  - Often seen as Distribution transitions into Markdown.

The key idea: extreme emotions on either side are warnings. CycleGuard surfaces those states so you can apply your own risk rules more consistently.

Workflow: Using Wyckoff with CycleGuard

1. Check Stage & Emotion
   Look at the latest CycleGuard output for your asset:
   Stage: Distribution (early) – Emotion: Euphoria/Complacency
   or
   Stage: Accumulation (early) – Emotion: Capitulation/Boredom
2. Map to the playbook
   - Accumulation / late Markdown → potential build/accumulate zone (educational).
   - Distribution / early Markdown → potential harvest/de-risk zone.
3. Apply your own risk framework
   - Time horizon, position sizing, max risk per trade.
   - Invalidation levels (technical or fundamental).
   - Portfolio-level exposure and diversification.
4. Treat CycleGuard as a co-pilot
   CycleGuard provides context (where we are in the cycle, crowd emotion). You still control if and how you act.

API Reference (Summary)

The backend exposes a small, focused HTTP API that powers all tabs in the app. The index below is fetched from /api/v1/docs.

Disclaimers

CycleGuard and this Wyckoff Playbook are for informational and educational purposes only.

• They do not constitute investment, trading, legal, tax, or financial advice.
• Markets are risky and can be extremely volatile.
• You are solely responsible for your own decisions and outcomes.
• Consider consulting a licensed financial professional before making investment decisions.

By using CycleGuard, you acknowledge that you understand and accept these limitations.