Wyckoff Analysis four stages of price cycle

The Four Stages of a Stock's Price Cycle and When to Buy and Sell

The price of a stock tends to move in cycles. Understanding these cycles can help investors determine optimal times to buy and sell for maximum profits. This article will explore the four key stages of a stock's price cycle through the lens of Wyckoff price cycle analysis.


Richard D. Wyckoff was a pioneering technical analyst who studied patterns in the stock market in the early 1900s. He observed that stocks tend to move in identifiable cycles characterized by specific price actions and behaviors.

These cycles can be broken down into four main stages:

  1. Accumulation
  2. Markup
  3. Distribution
  4. Mark down

Recognizing what stage a stock is in can guide investors on positioning to capitalize on emerging trends and avoid unnecessary losses.

Key Things to Know

  • The four stages repeat in cycles as stocks move through periods of uptrends and downtrends
  • Each stage provides clues on the current supply and demand dynamics
  • Knowing the type of price action to expect can inform buy and sell decisions

The Four Stages of the Wyckoff Stock Price Cycle

1. Accumulation Stage

In the accumulation stage, informed investors start to buy shares quietly while the price remains relatively steady or falls slightly over a period of time. This indicates that demand is slowly exceeding supply.

Price Action Clues

  • Narrow trading range
  • Regular pullbacks and support
  • Decreasing volume on down days

When to Buy

  • On pullbacks to areas of support when buying volume increases

2. Markup Stage

As word of the stock's prospects spreads, demand increases sharply sending the price rising rapidly. This indicates a markup phase is underway.

Price Action Clues

  • Widening trading range
  • Strong rallies on increasing volume
  • Higher highs and higher lows

When to Sell

  • Into strength when rallies show signs of exhaustion

3. Distribution Stage

Informed investors start to sell into strength quietly while demand falls off. This distribution phase is characterized by more volatile price action.

Price Action Clues

  • Widening trading range
  • Failed breakouts
  • Decreasing volume on up days

When to Sell

  • On failed rallies and breakouts

4. Mark Down Stage

As selling pressure overwhelms buying interest, the price begins a more pronounced decline. Selling often accelerates near the end signaling the final markdown.

Price Action Clues

  • Accelerating declines on increasing volume
  • Lower lows and lower highs

When to Buy

  • After capitulation when selling pressure exhausted

In Summary

  • Following a stock's price action relative to key Wyckoff cycle stages provides clues on emerging supply/demand trends
  • Recognizing whether a stock is being accumulated, marked up, distributed or marked down informs decision making
  • Buying during accumulation and selling into distribution allows profiting from the full price cycle

Applying the core principles of Wyckoff analysis to identify cycles stages can significantly improve market timing and performance.

Frequently Asked Questions

What are the four key stages stocks cycle through?

The four stages are accumulation, markup, distribution and markdown. These phases indicate shifts between demand exceeding supply and supply exceeding demand.

How can identifying the cycle stage help with buying and selling decisions?

It provides guidance on positioning. Investors can look to buy in accumulation when stocks attract significant buying interest and sell in distribution when informed investors are quietly unloading shares.

What signals that a stock may be transitioning from markup to distribution?

Clues include increased volatility, failed breakouts, widening trading range and decreasing volume on rallies. This indicates buying interest is waning.

Is it better to sell quickly after distribution starts?

Not necessarily. Allowing some distribution to unfold often leads to a better selling point than exiting early. The key is avoiding the inevitable markdown phase.


Applying the Wyckoff methodology for identifying cycles stages allows investors to make data-driven decisions aligned with emerging supply and demand trends. This facilitates buying stocks when they are under accumulation and selling them when they enter distribution. Mastering these core principles is essential for maximizing performance.

Watch video of teqmo charts share market malayalam youtube channel about 4 stages of stock price cycle or wyckoff cycle in malayalam. It is one of the main concept in wyckoff analysis.

Wyckoff analysis part 1 - https://youtu.be/f4BT9jtv55Y?si=8HCNKuoqxXjtJF2B





Check our other posts and videos in wyckoff analysis series

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