CYCLEPEDIAThe trading encyclopedia
ITENES
Richard D. Wyckoff 1873—1934

UTAD in distribution (didactic example)

Didactic Wyckoff case: generic distribution structure with phase C UTAD — demand test, SOW and LPSY — no real ticker.

On this page

Didactic case — Generic structure, no real ticker. Distributive counterpart to spring in accumulation: UTAD → SOW → LPSY in Distribution Schematic #1. For definitions and variants → Wyckoff encyclopedia entries.

Source: Wyckoff Analytics; Pruden, Wyckoff Schematics (MTA 2006). Distribution with UTAD in phase C — not required in every range (Schematic #2 may proceed without UTAD).

Context

After a mature uptrend, fictional ABC enters a trading range €92–€98. Phase A: buying climax at €97 on high volume, automatic reaction to €93, secondary test at €96 on declining volume. Phase B: distributive cause built over ~8 weeks. The Composite Man distributes while weak holders buy every dip.

Operational goal: do not short the first drop — wait for the decisive demand test in phase C.

Spring and UTAD — phase C traps Bear trap (accumulation) · Bull trap (distribution) Spring UTAD Both test who remains in the market — symmetric but mirrored. Cyclepedia diagram · Emiciclo
Spring (accumulation) and UTAD (distribution): same phase C test logic, opposite sign.

Setup

Element Value (example)
TR support €92 (lower creek)
TR resistance €98 (upper creek)
Operating phase C — demand test
Expected event UTAD above €98 with close back inside TR

Card — Valid UTAD criteria

  • Temporary break above TR resistance (phase C).
  • Volume on the break often high — breakout trader euphoria.
  • Close back inside TR — bull trap for weak buyers.
  • Follow-up confirmation: SOW below intermediate support, then LPSY.

Sequence

  1. Phase B — range €92–€98; declining volume on resistance tests; no full short.
  2. UTAD (phase C) — intraday €99.40 (+1.4% above creek); volume +45% vs 20-day average; close €96.60 inside TR.
  3. UTAD test — two sessions sideways €95–€97, volume still high but no new highs → demand exhausted.
  4. SOW (phase D) — break €94 (intermediate creek) on volume +38%; wide spread → supply in control.
  5. LPSY — pullback to €95 on volume −28%; technical stop above UTAD high (€99.60).
  6. Phase E — markdown toward €86; partial exit at pre-accumulation support.
SOW and LPSY — ICE break and last rally Phase D sequence: UTAD → fall through ICE → short on LPSY Range support Resistance ICE Volume 1 2 3 4 UTAD SOW LPSY Markdown SOW confirms distribution; LPSY offers timing — symmetric to SOS → LPS in accumulation. Cyclepedia diagram · Emiciclo
SOW confirms weakness; LPSY offers last distributive bounce before markdown.

Outcome / Lesson

Didactic outcome Interpretation
UTAD Trap for breakout traders; Composite Man distributes
Full short entry After SOW + LPSY, not on the UTAD
Invalidation Close above €99.60 or UTAD that holds outside TR

Lesson — The UTAD is not a short signal: it is a test. The effort/result law applies: high volume with a breakout that fails to hold = absorption at the highs by supply. Without SOW, the range may extend or fail upward.

Operational lesson today

Step What Wyckoff taught Modern parallel
Phase C UTAD Demand test — not a short signal Breakout with close inside range = filter, not automatic sell
SOW + LPSY Confirm supply before full size
context
Effort/result law High volume, breakout that fails to hold Divergent delta / extreme funding on crypto tops
Phase E Markdown after distributive cause
trading plan

Takeaway — At market tops (euphoric equity, crypto altseason), many «breakouts» are UTAD without SOW: do not short the first spike. Accumulative counterpart → spring in accumulation.

Full encyclopedia entries

Upthrust After Distribution (UTAD) · Distribution phases A–E · Sign of Weakness (SOW) · Last Point of Supply (LPSY)

Links: Wyckoff tradition · Case studies index

Suggest an edit My proposals