Distribution Phase

The Distribution Phase is the stage in Wyckoff Theory where institutional investors gradually offload (distribute) their large long positions to retail buyers near the top of an uptrend, before the next major price decline begins. Price moves in a sideways range at elevated levels, appearing to consolidate before the next leg higher — but internally, supply from institutional selling is overwhelming demand from retail buyers. Volume patterns during distribution often show high volume on down days and lower volume on up days, signalling that the smart money is exiting. The distribution phase concludes with a breakdown below the trading range (a Sign of Weakness), marking the transition to the Markdown phase. Identifying distribution can help investors reduce exposure before a significant correction in Indian equity markets.