Understanding Wyckoff Analysis for Storj ($STORJ)
Wyckoff Analysis (WA) is a method used to analyze market movements based on supply and demand dynamics. It is commonly applied to freely traded markets where institutional traders operate, including cryptocurrencies like Storj ($STORJ). In this article, we will use WA to make a forecast for future events related to Storj.
Storj in Phase E of Wyckoff Distribution Schematic #1
Storj is currently in Phase E of a Wyckoff Distribution Schematic #1. According to StockCharts, Phase E represents the unfolding of a downtrend where supply is in control. This phase is characterized by a breakdown of support levels followed by feeble rallies. Traders often take short positions during this phase. The trading range for Storj has fallen below the $1 – $1.12 range, indicating a major sell-off and distribution.
Elliott Wave (EWT) View on Storj
The Elliott Wave analysis also supports the idea of a small rally in Storj as it continues to decline in its Wave 2 correction. The majority of liquidity for Storj is concentrated between the 38.2% and 61.8% LFR at $0.56 and $0.76 respectively. This liquidity cluster aligns with the price range of subwave 4, confirming the occurrence of a Wave 2 correction.
Wyckoff Distribution Schematic #1
The typical schematic for a Wyckoff Distribution Schematic #1 illustrates the different phases and patterns that occur during a distribution phase in the market.
Glossary
- Preliminary Supply (PSY): Large interests begin to unload shares after an up-move.
- Buying Climax (BC): Large operators sell shares while the public buys at a premium during high demand.
- Automatic Reaction (AR): Intense buying diminishes, and heavy supply leads to a reaction.
- Secondary Test (ST): Price revisits the area of the Selling Climax (SC) to test supply/demand balance.
- Upthrust After Distribution (UTAD): Definitive test of new demand after breaking out above resistance.
- Test: Larger traders test the market for supply throughout a trading range.
- Sign of Weakness (SoW): Downward move to lower boundary of the trading range with increased spread and volume.
- Last Point of Supply (LPSY): Exhaustion of demand before the markdown phase begins.
- Elliott Wave Theory (EWT): A theory that attributes wave-like price patterns to trader psychology and investor sentiment.
- Logarithmic Fibonacci Retracement (LFR) and Logarithmic Fibonacci Extensions (LFE): Measured corrections and rallies at specific Fibonacci ratios on a semi-log scale.
Supplemental Reading
- “The Wyckoff Method: A Tutorial” by Bogomazov & Lipsett
- “Reaccumulation Review” by Bruce Fraser (2018)
- “Jumping the Creek: A Review” by Bruce Fraser (2018)
- “Distribution Review” by Bruce Fraser (2018)
- “Introduction to Point & Figure Charts” from StockCharts
- “P&F Price Objectives: Horizontal Counts” from StockCharts
- “The Wyckoff Methodology in Depth” by Rubén Villahermosa (2019)
- “Wyckoff 2.0: Structures, Volume Profile and Order Flow” by Rubén Villahermosa (2021)
- “Elliott Wave Principle – Key To Market Behavior” by Frost & Prechter (2022)
Hot Take: Storj Faces Distribution Phase with Potential for a Wave 2 Correction
Based on the analysis using Wyckoff Analysis and Elliott Wave Theory, Storj ($STORJ) is currently experiencing a distribution phase with a high probability of a Wave 2 correction. The price has fallen below key support levels, indicating a sell-off. Traders should be cautious and consider short positions during this phase. It’s important to monitor the liquidity cluster between the 38.2% and 61.8% LFR, as it aligns with the price range of subwave 4. This correction presents an opportunity for traders to take advantage of potential market movements.
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