Lesson 9: Market Movement

1. Accumulation Phase

This phase occurs at the end of a downward trend when smart money and institutional traders start buying. It is characterized by slow price movements and low volatility.

• Key Characteristics:

  • Price moves within a narrow range.

  • Volume is often lower than in other phases.

  • Institutional traders accumulate positions before a new uptrend begins.

• Trading Tip: Avoid entering during accumulation. Wait for a breakout and retest before going long.

2. Re-Accumulation / Re-Distribution Phase

Once the market has broken out of the accumulation phase and a clear trend is established, it enters this phase. This is a consolidation period within an existing trend where price stabilizes before continuing in the same direction.

• Key Characteristics:

  • Can occur in both uptrends and downtrends.

  • Price moves sideways before a continuation.

  • Traps many traders by faking reversals.

  • The longest of the three phases.

• Trading Tip: Be patient. This phase often precedes a strong price movement. Watch for breakouts and trend continuation signals.

3. Distribution Phase

The distribution phase marks the beginning of a downtrend. It occurs when big players start offloading their positions after an uptrend, often trapping inexperienced traders who continue to buy at high prices.

• Key Characteristics:

  • Similar to accumulation but occurs at the top of an uptrend.

  • Volume increases as institutions sell their holdings.

  • False breakouts may occur, trapping buyers before a trend reversal.

• Trading Tip: Never buy at the peak of a trend. Wait for confirmation before entering a trade.