Here’s How This Stock Sets Up Wyckoff Accumulation For The Next Big Move
Despite S&P 500 formed lower high and lower low since January 2022, a handful of stocks still bucked the trend and hit 52-weeks-high. The outperforming stocks showed greater strength in the past month as the stock market could be entering into the bottoming process according to the seasonality model as explained in the video at the bottom of this post. Let’s adopt the Wyckoff trading method to analyse how this potential future market leader sets up the accumulation structure to prepare for the next big move.
Wyckoff Accumulation Pattern Explained for Molson Coors Beverage (TAP)
After a climatic run up in January 2022 followed by an automatic rally (AR) as a change of character, Molson Coors Beverage Company (TAP) entered into a trading range between 42-59. During phase A and B, TAP has tested both the support and resistance with decreasing volume suggested the selling momentum has been exhausted. Refer to the chart below.
After phase C was completed, TAP started a decent rally followed by a shallow pullback right at the resistance zone. This pullback was the best reaction as it did not go back to test the support near 42 unlike the previous reactions, suggested the timing to move out of the trading range between 42-59.
Since January 2022 TAP has been outperforming S&P 500 as reflected in the relative strength indicator in the bottom pane of the chart as highlighted in green. This simply reflected smart money rotation into TAP and hence it has been trending up while S&P 500 going down.
As the pattern is similar to a cup and handle pattern, one might view it as such while it is breaking out from the right handle last week. The right handle also formed as a fractal of the Wyckoff accumulation pattern, which provided a decent reward to risk entry setup with a stop loss below 54.
Should the breakout above 60 be successful, TAP is expected to challenge the higher price targets at 65 and 77. A failure below 54 could mean a prolonged trading range between 50-57.
Stock Market Bottom? Here’s What This Seasonality Chart Says
As mentioned earlier, the stock market bottom could be in according to the seasonality chart of the U.S. midterm election. It is uncanny to witness how this seasonality chart predicted the movement of S&P 500 in the first half of 2022. Watch the video below to find out how to use it to anticipate the market movement.
Volatility is expected to continue together with the bearish headlines during the bottoming process. Yet, outperforming stocks like TAP and a handful of them will start moving higher despite the choppiness in the indices like S&5 500, Nasdaq, Dow Jones and Russell 2000.
This is the nature of outperforming stocks. Money rotation tends to happen during the bottoming process. No doubt many stocks and the indices are likely to continue to experience high volatility, the outperforming stocks should hold up relatively well and emerge as the future market leaders in the next bull run. Visit TradePrecise.com to get more stock market insights in email for free.
This article was originally posted on FX Empire
