The first law is the foundation: when demand exceeds supply price rises, and when supply exceeds demand it falls. Everything else in Wyckoff is a refinement of how to detect this imbalance before it fully plays out.
Reading the imbalance
You cannot see the order book directly, so you infer the balance from how price responds. Rallies on rising volume that hold their gains suggest demand is in charge; declines that stall and can't make new lows suggest supply is drying up. The tape leaves clues even when you can't see every order.
Pay close attention to what happens at range edges. If price pushes into resistance but is met by heavy selling and falls back, supply is present. If it dips to support and is bought aggressively, demand is present. Repeated tests reveal which side is being exhausted.
- Wide up-candles on strong volume: demand in control.
- Wide down-candles on strong volume: supply in control.
- Failure to extend despite heavy volume: the opposing side is absorbing.
- Narrowing ranges near an edge: one side may be running out.
Price rises when demand overpowers supply and falls when supply overpowers demand — read who is winning at the range edges.
This law is a probabilistic read, not certainty. Absorption can continue longer than expected, and a side that looks exhausted can find fresh participants. Confirm the imbalance with follow-through before committing.