Wyckoff distribution schematic

After an advance, price makes a buying climax on extreme volume, reacts sharply, then rallies back toward the highs on weaker participation. Attempts above the range, called upthrusts, fail and return inside. The range eventually resolves down.

The diagnostic idea is that big holders need a liquid, optimistic market to sell into, so distribution happens while the chart still looks strong. This is why market-breadth deterioration often shows up before the index itself turns.

Distribution ranges are notoriously slow and can be mistaken for accumulation many times before resolving. Anyone shorting inside a possible distribution range needs a hard invalidation-level above the range, because the alternative interpretation is always live.

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Range versus trend. On the left price keeps bouncing between the same floor and ceiling, which is a range. On the right each high and each low is higher than the last, inside a pair of sloping lines called a channel.