1.3 KiB
The Three Laws (Part 3, Ch.9–11)
1. Law of Supply & Demand
Price moves in the direction of the imbalance. When demand exceeds supply, price rises. When supply exceeds demand, price falls. Wyckoff events are expressions of these imbalances.
2. Law of Cause & Effect
The width and duration of an accumulation or distribution range (the cause) determines the extent of the subsequent markup or markdown move (the effect). A wider range with longer development produces a larger projected move. This is measured through Point & Figure count projections and structural range height.
Both are implemented in ADWyckoffEventStream v5.6: structural range height as TargetLong/TargetShort, the Point & Figure horizontal count as PFCount/TargetLongPF/TargetShortPF. Only the horizontal count responds to duration.
3. Law of Effort vs Result
Volume is the effort and price movement is the result. When volume and price move in harmony, the trend is healthy. When volume diverges from price (high volume with little price progress, or low volume with large price moves), exhaustion or reversal is imminent. This law can be assessed at multiple scales: within a single candle, in the subsequent displacement, across complete movements, by wave (Weis Wave), and when approaching key levels.