TRX Re-distribution Range?

TRX looks as though it may be in the middle of a re-distribution range. I’ll take a quick look into the micro-TFs to explore some key characteristics of re-distribution. As always, this could easily be flipped or interpreted in a different way. The information within this post should be helpful regardless of whether this manifests itself as re-distribution or not.

Firstly TRX has been in a long downward trend for some time. We then see (as we did across all major alts) a spike in volume and activity. This broke the downward trajectory and offered a brief respite in price action.
Re-distribution as a Concept
I’ll start with a quick overview of reaccumulation, which may seem strange considering the title of this section. Understanding both will allow you to better spot the differences between them.
Reaccumulation is a pause in an uptrend, simply put it’s where absorption takes place for a continuation of the uptrend. Absorption is the process of removing stock from the marketplace in anticipation of a major uptend. This is primarily the activity of the Composite Operator whom has the purchasing power to remove meaningful quantities of stock from active daily trading. The knock-on effect of absorbing stock is that it greatly reduces volatility.
At the beginning of Reaccumulation, volatility is high as a result of the many speculator and trader types who have latched onto the prior uptrend. The early corrections against the uptrend are quick and volatile as shorter term investors take profits. Then, as the sideways trading range develops, the corrections become more dull and contained. This is because the C.O. and institutions are putting bids in to buy shares on pullbacks. These orders create support for the stock price. Often the last half of the time spent in the Reaccumulation trading range sees the price making a series of higher lows. Recall that a primary objective of the C.O. is to carefully accumulate shares in such a way that they don’t force prices to begin the uptrend before all of their buying is completed.
Contrast that with the activity taking place during Redistribution. Bear market downtrends tend to be volatile. Short covering causes spikes in prices. These rallies often mark the beginning of the Redistribution. Sharply rising prices tend to drive out short-sellers and cause the desired shakeout effect. What happens during Redistribution is that a series of rallies and declines remove as many shorters from their position as possible. Once this series of rallies has concluded the downtrend usually returns in force and with a bang.
Re-distribution often comes in a range of structures which can make things incredibly difficult to analyse. We have to try and identify where possible the correct elements to determine moves. As you would have learned while studying chart formations (if that’s your thing) you trade the breakout or the retest, the same applies with Wyckoff. If you label your charts and consider your analysis there are ample opportunities to open a trade and you will have suitable stop positions that invalidate the approach.
TRX as the Current Example
So, let’s look at TRX as a live example and how I’m grabbing my scraps of evidence. Keep in mind as mentioned in the opening, this is my interpretation of events, you may disagree or think I’m insane but that’s what makes trading great. This small write-up shows my logic when it comes to placing trades on this perceived range.

You can see the long downtrend for TRX, we then break structure and enter a period of sideways action.
The first thing I note here is the increase in volume across the range, volume remains high throughout the range so far and in some areas we’ll explain in more detail.
We see a traditional Selling Climax on August 13th resulting in a huge spike of volume before an automatic reaction into the Buying Climax (BC). This is the first scrap of evidence we can use to determine the range and plot our TR boundaries. At this stage it could easily be accumulation, we’ve seen a downtrend and perhaps we’re pausing to build a case for the new uptrend beginning.
As we move through the range buying volume increases, we see natural points to label as our AR (to the BC) our first ST and our first Signs of Weakness (SOW). Notice the similarities at this point to the classic distribution formation.

We have to use volume to determine the differences between spring tests and signs of weakness. Giving our first potential clues to accu vs dist.
SOW – sign of weakness, observable as a down-move to (or slightly past) the lower boundary of the TR, usually occurring on increased spread and volume. The AR and the initial SOW(s) indicate a change of character in the price action of the stock: supply is now dominant.
We see in this move that volume is increased through the SOW, price finishes below the AR giving us our future reference point for the rest of the potential range.

Next is the move to the Upthrust (UT).
In distribution, phase C may reveal itself via an upthrust (UT) or UTAD. An upthrust is the opposite of a spring. It is a price move above TR resistance that quickly reverses and closes in the TR. This is a test of the remaining demand. It is also a bull trap – it appears to signal the resumption of the uptrend but in reality is intended to “wrong-foot” uninformed break-out traders. A UT or UTAD allows large interests to mislead the public about the future trend direction and to sell additional shares at elevated prices to such break-out traders and investors before the markdown begins. In addition, a UTAD may induce smaller traders in short positions to cover and surrender their shares to the larger interests who have engineered this move.
Buying volume spikes during the movement upwards, bull trap success? It is almost immediately pulled back into the TR. We then see a follow up attempt on reduced volume to break the high of the UT. This fails and provides yet another opportunity to entice breakout traders and to shakeout those who entered short positions in the UT.
Entering short during an upthrust usually has a solid R:R. It provides a clear stop to help contain your trade and invalidate the approach. Be careful though, as with this example of TRX you can and probably will be the target of multiple shakeouts trying to remove you from what will potentially become a very profitable position.
From the shakeout we see a decline in volume before our huge sell spike (we all know what happened that day).

The spike takes us back below the TR and into the SOW zone. During this phase we would expect to see multiple rallies to try and hold the TR. These (if this is redistribution should end in failure). They also represent opportunities to initiate or add to short positions.
What’s Next?
Well, as mentioned at the beginning, re-distribution ends with a bang. The move away from the range will be violent. There may be multiple attempts to break inside the TR and we could see an attempt to form another high within the range. I suspect we will see multiple attempts to reclaim the range and ensure this isn’t a complete blowout.
Given this is such a micro-TF analysis the range could continue with multiple tests of supply. The channel below may not stay in-tact but it provides another reference point. The volume reaction to each side of the channel has been a nice link so far.

Summary
This is a micro-TF range to be considering for re-distribution but I’m happy that it present multiple opportunities for analysis. It enabled me to plan my trades accordingly. I hope that this write-up has provided a little more insight into how re-distribution ranges occur, form and can be analysed with a working example.
I’ll update this post with the outcome, either going my way or not, to try to identify what went wrong if this doesn’t follow re-distribution.
