PHASE A:
Represents the area of the stopping of the previous move/trend
BC: Buying climax, The buying climax has increased volume and a widening spread as it moves up.
PSY: preliminary Supply, the first meaningful reaction in the initial distribution in phase A, Usually there’s some form of a Buying Climax which stops the move and that is followed by a REACTION, (PSY), which has pronounced Spread or volume or preferably both (wide spread & high volume), high volume confirmed
PS (1): Preliminary Support, is a form of selling climax, in which the downtrend is paused temporarily. The importance of the (PS) is as a warning that the end of the down move may be near. The significance of the (PS) is that if the entire base is accumulation the accumulation may have begun at the (PS) and continued throughout the base. Very often obscured due to the violent price action.
SC (2): Selling Climax, characterised by the highest intensity of speculative supply occurring within a downtrend. This situation occurs only after a move has been in effect for some time. This condition marks the end or the approaching end of a particular downtrend. This panic selling creates an extreme expansion of the price spread and an expansion of the volume, this action may occur over one day or over several days.
The Selling Climax is caused by panicky liquidation, panicky selling. The price is driven down to far and this creates a vacuum and as soon as the down move has been stopped the stock should begin to rally.
AR (3): Automatic rally: Following the Selling Climax one of two things may happen: an Automatic rally (AR) or a lateral move. This is then followed again by one or two things either a Secondary Test (ST) or a continuation of the downtrend.
If there is a simple lateral move the stock is far more likely to continue the downtrend then if there is a good rally. (which we had.. ~100% retrace) the high of the initial AR determines the upper trading range resistance.
PHASE B:
During this phase supply and demand are generally in equilibrium with no decisive trend. as this trading range unfolds supply reduces and demand increases as this phase comes to the end volume tends to diminish. D, C and B contain the TR, with (A) SC support providing the test process in Phase C
ST: Secondary Test, follows after the previous AR should be less selling than on the Selling Climax. Evidenced by the decreased price weakness, the narrowing of the Spread and especially by the Decreased Volume. At that point the down trend has likely has been stopped. The stock may go through redistribution, accumulation, or a trading range in which nothing of importance is going on. There may be repeated secondary tests and/or springs and shakeouts depending upon the ability of the professionals to absorb the supply and the continued existence of that supply.
Phase C: This is where the testing process begins, the price may come out of the TR on the upside or it may go through a downside spring or a shakeout, breaking the A and B supports. The latter is more preferable as it clears weak holders and creates a false impression as to the direction of the overall price action
6 and 7-through to the end of Phase B: SOS (sign of strength) Major Creek!... Upper branch, The jump of the major creek is a larger move and it very often carries the price above the old supply levels in the T/R often into new high ground. This is confirmed as a Backup to the edge of the creek (BEC) as it coincides with a previous last points of support ( 5 and 1)
8: SPRING: A spring is a penetration below a previous support area which enables one to judge that quality and quantity of that supply on that penetration. The critical thing that is shown by the spring is the amount of supply that comes out on the break of support and drive to new low ground and how well the supply is absorbed.
Very important.
#3 Spring is evidenced by lack of a INCREASE in the general level of trading. Any INCREASE in volume if at all is very, very MINOR. And there is a lack of IMPORTANT PRICE WEAKNESS as it goes into NEW LOW GROUND and the SPREAD does NOT materially WIDEN. Small supply and HEAVY DEMAND a #3 spring.
Springs can be preceded by at least Minor and often intermediate distribution which is far more likely to occur in a major and sustained downtrend
Low volume on break of support at the spring, indicates that the way is clear for a sustained advance.
9: "AR". Automatic Technical rally, following spring below support. Too fast too quick, Technical retrace before Test and Reversal stages
10: Sign of strength following test, advance in price on increasing volume
10+... Cross or Jump the creek next??? rally above the creek tops trendline?. This jump or crossing will be a Sign Of Strength (SOS). Now where is the creek? After much searching for the answer to this question Applying this to the market, the CREEK cross/jump is WHERE the VOLUME CAME IN, where the EFFORT, the PUSH, the POWER came in.... Volume is now increasing after a sustained decline since December
In Phase D: the mark up begins to blossom as professionals and "smart money" move the price up, it is here that the best opportunities exist to add or start a position exist, before it leaves the TR
If correct and the timing is right, what follows next should be consistent dominance of demand over supply evidenced by patterns advances of advances in the price with widening spread and increasing volume, which is indicative of the price action the past 10 days since the follow up Test (10)
If the price continues to advance additional opportunities to build/add too a position may occur. The aim here is to enter into position or add as it is about to leave the trading range before the accumulation phases end and Prices advances through Phase D and E.
Represents the area of the stopping of the previous move/trend
BC: Buying climax, The buying climax has increased volume and a widening spread as it moves up.
PSY: preliminary Supply, the first meaningful reaction in the initial distribution in phase A, Usually there’s some form of a Buying Climax which stops the move and that is followed by a REACTION, (PSY), which has pronounced Spread or volume or preferably both (wide spread & high volume), high volume confirmed
PS (1): Preliminary Support, is a form of selling climax, in which the downtrend is paused temporarily. The importance of the (PS) is as a warning that the end of the down move may be near. The significance of the (PS) is that if the entire base is accumulation the accumulation may have begun at the (PS) and continued throughout the base. Very often obscured due to the violent price action.
SC (2): Selling Climax, characterised by the highest intensity of speculative supply occurring within a downtrend. This situation occurs only after a move has been in effect for some time. This condition marks the end or the approaching end of a particular downtrend. This panic selling creates an extreme expansion of the price spread and an expansion of the volume, this action may occur over one day or over several days.
The Selling Climax is caused by panicky liquidation, panicky selling. The price is driven down to far and this creates a vacuum and as soon as the down move has been stopped the stock should begin to rally.
AR (3): Automatic rally: Following the Selling Climax one of two things may happen: an Automatic rally (AR) or a lateral move. This is then followed again by one or two things either a Secondary Test (ST) or a continuation of the downtrend.
If there is a simple lateral move the stock is far more likely to continue the downtrend then if there is a good rally. (which we had.. ~100% retrace) the high of the initial AR determines the upper trading range resistance.
PHASE B:
During this phase supply and demand are generally in equilibrium with no decisive trend. as this trading range unfolds supply reduces and demand increases as this phase comes to the end volume tends to diminish. D, C and B contain the TR, with (A) SC support providing the test process in Phase C
ST: Secondary Test, follows after the previous AR should be less selling than on the Selling Climax. Evidenced by the decreased price weakness, the narrowing of the Spread and especially by the Decreased Volume. At that point the down trend has likely has been stopped. The stock may go through redistribution, accumulation, or a trading range in which nothing of importance is going on. There may be repeated secondary tests and/or springs and shakeouts depending upon the ability of the professionals to absorb the supply and the continued existence of that supply.
Phase C: This is where the testing process begins, the price may come out of the TR on the upside or it may go through a downside spring or a shakeout, breaking the A and B supports. The latter is more preferable as it clears weak holders and creates a false impression as to the direction of the overall price action
6 and 7-through to the end of Phase B: SOS (sign of strength) Major Creek!... Upper branch, The jump of the major creek is a larger move and it very often carries the price above the old supply levels in the T/R often into new high ground. This is confirmed as a Backup to the edge of the creek (BEC) as it coincides with a previous last points of support ( 5 and 1)
8: SPRING: A spring is a penetration below a previous support area which enables one to judge that quality and quantity of that supply on that penetration. The critical thing that is shown by the spring is the amount of supply that comes out on the break of support and drive to new low ground and how well the supply is absorbed.
Very important.
#3 Spring is evidenced by lack of a INCREASE in the general level of trading. Any INCREASE in volume if at all is very, very MINOR. And there is a lack of IMPORTANT PRICE WEAKNESS as it goes into NEW LOW GROUND and the SPREAD does NOT materially WIDEN. Small supply and HEAVY DEMAND a #3 spring.
Springs can be preceded by at least Minor and often intermediate distribution which is far more likely to occur in a major and sustained downtrend
Low volume on break of support at the spring, indicates that the way is clear for a sustained advance.
9: "AR". Automatic Technical rally, following spring below support. Too fast too quick, Technical retrace before Test and Reversal stages
10: Sign of strength following test, advance in price on increasing volume
10+... Cross or Jump the creek next??? rally above the creek tops trendline?. This jump or crossing will be a Sign Of Strength (SOS). Now where is the creek? After much searching for the answer to this question Applying this to the market, the CREEK cross/jump is WHERE the VOLUME CAME IN, where the EFFORT, the PUSH, the POWER came in.... Volume is now increasing after a sustained decline since December
In Phase D: the mark up begins to blossom as professionals and "smart money" move the price up, it is here that the best opportunities exist to add or start a position exist, before it leaves the TR
If correct and the timing is right, what follows next should be consistent dominance of demand over supply evidenced by patterns advances of advances in the price with widening spread and increasing volume, which is indicative of the price action the past 10 days since the follow up Test (10)
If the price continues to advance additional opportunities to build/add too a position may occur. The aim here is to enter into position or add as it is about to leave the trading range before the accumulation phases end and Prices advances through Phase D and E.