BRU Weekly Chart Analysis - made after a request to some chat about the recent sideways range being a new accumulation zone, and the shakeout/spring preceding a breakout.
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The biggest problem with the Wyckoff schematic, is market players trying to fit (force) price action into it, instead of matching the price action to its certain individual phases.
And then putting the individual phases together into some sort of understandable story, as it unfolds.
The regular Schematic seen all over the internet, shows the 'perfect text book' set up and then the mark up scenario.......and how often does the market play out 'text book perfectly'.
I suggest not very often (but perhaps sometimes....well 'sometimes' at best, I guess).
Those individual phases are correct, and do play out as expected, no doubt.
But in the real world they often occur quite differently that the standard schematic - for whatever reason.
For instance, The main well known Wyckoff phases are Accumulation, Mark Up, Re-Accumulation, Mark Up, Distribution, Mark Down, Re-distribution, Mark Down, and then it starts over again with a new Accumulation phase.
However, for instance, I have seen charts where price accumulates, marks up, then re-accumulates, marks up again, re-accumulates again...marks up again.....and continues like this over and over for an extended period, without any of the other phases being seen (yet).
Another I saw a year or so ago, showed what looked like a pretty serious accumulation phase underway. And some decent coin was being put into positioning. But then some uncertainty appeared to come into the price action, and the underlying market sentiment began to waver, and then quite suddenly price broke down violently for no apparent reason. At the time I could only wonder if the accumulators (for want of a better word), had unexpectedly dumped all their recently accumulated stock. And subsequently that appeared to be the case (and that is also why I always (or often) say that price remains quite vulnerable, particularly during the accumulation phase.....as the buyers are not yet committed to their positions, and are not yet seriously defending against supply).
So even if an accumulation phase is obvious or identifiable, there is no 100% certainty it will play out as expected, there is just a 'higher' probability it will do so. And the probability becomes much higher again once the mark up phase begins (because the players become committed to their position, and so long as sentiment and conditions remains mostly favourable, will begin to defend price against supply - within reason).
So I prefer to let the chart do the talking, and I just try to interpret or match the individual phases to the price action where possible, and then put them into some sort of understandable context with each other, to form an unfolding story.
Finally, the understanding of individual stocks is generally more accurate, if the underlying stock is (at least) matched against its sector (energy in this case I guess), and the individual stocks announcements. However, I have not taken the time to look at this stocks individual announcements, so I am flying blind here. I do however, have some reasonable understanding of the ASX energy sector, and the overseas futures markets.
So anyway, I always find it best to look at the larger time frames first, and attempt to put some of the phases into some sort of context, and gain some understanding of what has happened previously (from a buying and selling point of view).
Below is the weekly chart (which takes out a lot of the daily noise, but has less defined or accurate levels).
(I do note that some of the levels are a little messy or blurred - which is usually (or often) a sign of a relatively high retail involvement. This often leads an individual SR line to become more like a zone, but on the chart, I will usually either mark multiple lines close together to show the zone, or just mark an individual line, even though it should be a broader zone than shown).
I marked up the weekly chart with some of the obvious points of interest (and possible phases)
View attachment 1380193
So for me, more recently, price is currently attempting to consolidate after breaking down in mid June.
I also note this stock is roughly following the fortunes of its underlying sector, which is not surprising.
(edit - the energy sector saw some tentative or speculative support come in this week, both locally and overseas)
Finally, there is a possible, but unconfirmed, shakeout type bar recently, and these can often arrive after a period of accumulation (strength) and prior to a breakout.
In this case there is only tentative strength at best (the sideways motion breaking the downtrend), with confirmed weakness (supply event) above, at the older highs.
So that shakeout type bar could either be supply beginning to overwhelm what demand is present (preceding a secondary breakdown), or it could be a true shakeout, which is basically a challenge to sellers to emerge (so they can be removed - or more correctly, have their supply absorbed).
I don't know which as yet......I suspect it might be the former, but it is just too soon - remember this is a weekly chart.
Things are more clear on a weekly chart (because there is much more info on each bar), but they more more slowly as well.
And that shakeout type bar does also form a spring. It is not a great one because price is in a sideways to down trend, with confirmed weakness (selling) above. And springs work best with strength (buying) behind them, and when price is in the mark up phase (uptrending). It might pay a bit, but most likely not too much.....we'll see.....
So in a nutshell,
I would suggest this recent 'sideways trading range' is more likely to be a period of 'consolidation or recovery' after some serious weakness (selling) at the previous highs, and then a price breakdown in response, and not really a 'proper' accumulation phase.
Actually, if you look at the complete Wyckoff schematic, and match it to my weekly interpretation of the phases, it could easily be better interpreted as a period of re-distribution, which would suggest there is another leg lower to come.
I won't necessarily go that far just yet, but I do see price as being vulnerable right now.
Sure that sideways range has seen some buying or support within it, but it is still drawing out supply as well, and when supply continues to be drawn out at a particular level, price will rarely move sustainably higher.
And just on that spring bar (so you know for future reference).
Springs work best with strength (serious buying) in the back ground, and when price is trading positively - 'sideways to up'.
And springs work poorly (or just plain fail), with weakness (strong selling) in the back ground, and when price is trading negatively - 'sideways to down'.
Springs can also be a bit counter intuitive, as the little tiny springs (when they just move a pip or two below previous support before recovering) are generally seen as much stronger and more consistent, than deep springs that are allowed to move well below a previous support level before any meaningful recovery is seen.
My way of understanding this quirk, is that when a little tiny spring forms, and price snaps back quickly above the previous support level. It is illustrating that demand (support) was ready and willing to immediately defend price at the previous support level, and that demand is strong (it is sort of a buy the dips mentality in broker speak, with plenty of buyers waiting on the sidelines to buy any price weakness that turns up).
Whereas if price is allowed to penetrate deeply below previous support before any recovery is seen, it suggests that price took a long time to muster up sufficient demand to counter the supply that pushed it lower, and in turn support price - and then the logical thought is that - if further ongoing supply was to come in at that previous support level, it may not take much more to overwhelm demand, and cause a breakdown, which will usually then see the inevitable domino effect begin, as supply pushes price lower with an increasing spread.
Just though I would add that to clarify my thoughts, and hopefully help with more detailed understanding of springs (actually Wyckoff never actually called that price action 'springs' - that is a more modern name or interpretation - he would say that "price is on the springboard", and that is where the word came from).
cheers
(20min delay)