In plain terms — PSY is an early warning, not a final top: after a pronounced advance, selling becomes significant enough to expand activity and price range while the trend may still continue.
Definition
In Wyckoff codification, Preliminary Supply (PSY) is the area where significant supply begins to appear after a pronounced advance. Volume and price spread tend to expand, suggesting that a change of trend may be approaching.
The school describes PSY as large interests beginning to unload positions. On a chart, however, only price and volume are observable: participants' identity and intent remain an inference within the Composite Man model.
What distinguishes PSY
| Observation | Cautious reading |
|---|---|
| Context of a pronounced advance | Important condition: the same behaviour elsewhere may mean something different |
| Expanding volume and spread | Initial evidence of supply in the model, not proof of a top |
| Price continues higher after the event | Compatible with PSY: demand is not necessarily exhausted |
| Makes phase A more legible in hindsight |
This entry does not separate PSY and Buying Climax with a preset volume ratio. PSY is preliminary; BC represents a possible culmination of demand and spread. The distinction is therefore treated contextually and may remain uncertain in real time.
Teaching example — After months of advance, a wide reaction appears on greater-than-usual volume, but price recovers and makes another high. The event can only be labelled PSY provisionally. If BC, Automatic Reaction and ST follow, the distribution sequence becomes more plausible; sustained trend resumption weakens it.
Limits
- PSY does not imply that markdown has started.
- An uptrend can end without clearly recognisable PSY or BC.
- In redistribution, phase A can look different and resemble a downside climax.
- The label neither prescribes a short sale nor defines risk and timing by itself.
Its accumulation counterpart is Preliminary Support (PS).
Sources
- Wyckoff Analytics — Wyckoff Method — PSY and phase A in distribution and redistribution.
- StockCharts ChartSchool — The Wyckoff Method: A Tutorial — PSY, BC, AR, ST and the non-climactic variant.
- Hank Pruden — The Wyckoff Method of Technical Analysis and Speculation, Wiley — discretionary reading of price, volume and trading ranges.
These sources document the school's terminology and criteria; they do not validate PSY as a stand-alone statistical predictor.
Wyckoff Analytics and StockCharts publish substantially the same tutorial: they are cited as two locations for the same codification, not as independent confirmations. The Wiley DOI page exposes the metadata and publication record; the full text may require a subscription or institutional access.