What is an Upthrust in Trading?
Quick Answer: An upthrust is a Wyckoff concept where price briefly breaks above resistance, triggers breakout buying, then quickly reverses lower as smart money distributes positions.
Understanding Upthrusts in Wyckoff Theory
An upthrust occurs when price briefly breaks above resistance, triggering breakout buys, before quickly reversing lower. Wyckoff traders view upthrusts as evidence of distribution by strong hands using liquidity from trapped longs.
Spotting Upthrust Conditions
Look for an aggressive move beyond a range high, accompanied by volume spike or liquidity void, followed by a decisive close back inside the range. Upthrust-after-distribution (UTAD) patterns often precede major markdown phases.
Trade Execution
Enter short on the reclaim of resistance or on a retest of the failed breakout. Place stops above the upthrust wick and target the range midpoint or opposite boundary.
Confirmation Matters
Avoid shorting every failed breakout. Confirm with broader distribution signs—lower highs, weakening demand, or macro catalysts—before positioning.
Trend Context
In strong bull markets, some upthrusts resolve higher after a brief pullback. Keep risk tight and reassess if price recovers with increased volume.
Related Terms
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