The Four Phases
Every market moves in cycles driven by collective psychology.
Phase 1: Accumulation
After a prolonged downtrend. Most retail traders have given up. Smart money quietly buys at low prices. Charts show extended sideways movement. The Fear and Greed Index shows extreme fear.
Phase 2: Uptrend
Buying pressure overwhelms sellers. Prices rise. Media turns optimistic. Best phase for swing trading. Moving averages slope upward, price stays above the 200-day SMA.
Phase 3: Distribution
Early buyers take profits. Market becomes volatile. Most dangerous for new traders — feels like uptrend is continuing but momentum is fading. Watch for bearish RSI divergence.
Phase 4: Downtrend
Distribution complete. Price breaks below 200-day SMA. Each bounce weaker. Professional traders sit in stablecoins or trade short. Trying to buy the dip in a genuine downtrend is one of the most common mistakes.
Our market analysis courses teach cycle identification using multiple data points.