This phase is characterized by sideways trading action or consolidation. Heavy weights and institutional investors are buying up the stock during this period in large quantities. The goal is to accumulate within a range without alerting the general public. Levels of support and resistance are typically well defined during this phase.
This is the phase where the security starts to trend up. Characterized generally by “higher highs and higher lows”.
The uptrend ceases during this phase and institutional investors aka "smart money" begins to unload the shares they acquired during the accumulation phase. Pictorially; this looks similar to the "accumulation" phase. Smart money wants to unload their shares without necessarily causing a massive drop instantly. It's a gradual process that can take many months or years to complete.
The trend during this phase is characterized by a decline. Selling by institutions and other retail longs.
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