In plain terms — Distribution is the model through which Wyckoff analysis reads a range after an advance as a possible shift from demand to supply. The phases organise evidence; they are not a template that every market top must copy.
Scope of the model
Distribution is a trading range that, in Wyckoff interpretation, may prepare a later markdown. It is conceptually the mirror of accumulation, but real charts need not display visual symmetry. The structure is inferred by comparing advances and declines, spread, volume, trend position and behaviour at the range boundaries.
In the codification used by the cited sources, distribution is organised into phases A–E. It is a descriptive, discretionary tool: real-time identification remains uncertain and can change as new bars appear.
| Phase | Function in the model | Typical, non-mandatory evidence |
|---|---|---|
| A | Stop the prior uptrend | PSY, BC, Automatic Reaction and ST; or less climactic exhaustion |
| B | Build the distribution “cause” | Range oscillations and a gradual shift in rallies versus reactions |
| C | Test remaining demand | UT or UTAD above resistance; it may be absent or stop below former highs |
| D | Increase evidence of supply | SOW toward or below support and weak rallies labelled LPSY |
| E | Develop markdown | Departure from the range and bearish progression; rallies and new ranges remain possible |
Phase A: stop the uptrend
Preliminary Supply (PSY) represents emerging supply after a pronounced advance. The Buying Climax (BC) is a possible culmination of demand; the Automatic Reaction (AR) helps establish initial support and the Secondary Test (ST) revisits the BC area.
This sequence is not compulsory. Wyckoff Analytics states that an uptrend can end without climactic action, instead showing less progress, narrower spreads and lower volume on rally attempts. In redistribution within a downtrend, phase A can also resemble the start of accumulation.
Phase B: build the cause
In Wyckoff language, phase B builds a cause for the possible next move. The analyst looks for relative deterioration: poorer rallies, easier reactions and evidence that the demand-supply relationship is shifting. No single indicator proves that large operators are distributing; the Composite Man is an interpretive model.
The duration of phase B and any Point & Figure count do not set a certain objective. P&F projections depend on scale, box size, reversal and count selection.
Phase C: test demand
An Upthrust (UT) or UTAD can carry price above resistance and then back into the range. Wyckoff analysis treats this as a test of remaining demand. The UTAD is not required: when demand is weak, the test may stop below BC or ST; in other cases phase C remains ambiguous.
Teaching example — With resistance at 80, price reaches 82 and returns below 80. The form is compatible with an upthrust, but a UTAD label requires an already mature distribution and supporting follow-through. Sustained progress above 82 would negate the reading; a SOW toward support would strengthen it.
Phases D and E: weakness and markdown
The Sign of Weakness (SOW) is a move toward or through support, often on expanding spread and volume. Later weak rallies can form Last Points of Supply (LPSY). In phase D, evidence for supply increases; in phase E, price leaves the range and the downtrend unfolds.
“Supply dominant” remains a conclusion of the model, not a directly observable fact. A breakdown can fail, price can return to the range and a structure labelled distribution can resolve upward.
Variants and controls
- Modern schematics show one variant with UTAD and one without a clear UTAD.
- BC, PSY and ST may be subtle; they should not be inserted merely to complete the drawing.
- Distribution and redistribution share phases B–E but have different preceding contexts.
- Phase, label and outcome must remain separate: no phase automatically prescribes a position, stop or target.
- Market comparison, relative strength and risk management remain separate analyses.
Sources
- Wyckoff Analytics — Wyckoff Method — events, phases, variants, redistribution and reading limits.
- StockCharts ChartSchool — The Wyckoff Method: A Tutorial — two distribution schematics and definitions of PSY, BC, AR, ST, UTAD, SOW and LPSY.
- Hank Pruden — The Wyckoff Method of Technical Analysis and Speculation, Wiley — discretionary method, laws and trading ranges.
These sources verify the reconstruction of the methodology; they do not statistically validate its predictive power.
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.