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CHoCH - Change of Character
When does a trend change into consolidation?
How can we observe this change in enviroment?
Change of Character coming out of a trading range – the largest move (swing) in the direction
of a future trend with the following traits:
1. Largest swing move within a trading range (compared to previous same-directional swings)
2. Occurrence of this move in Phase D
3. Commitment of price above/below current trading range’s resistance/support lines
4. Improvement/Deterioration of Relative Strength leadership
CHEAT SHEET
(Accumulation: Phases A and B)
1. INTENTIONS behind Phases A and B:
i. Phase A: STOP
ii. Phase B: SUPPLY/DEMAND
2. WYCKOFF EVENTS:
i. Phase A: PS, SC, AR, ST
ii. Phase B: UT, ST and ST as SOW
3. PRELIMINARY SUPPORT:
i. First attempt to stop a decline
ii. It always fails as price goes lower to SC low
4. SELLING CLIMAX:
i. Big spread / big volume
ii. Exception 1: Contracting supply on continuous
lower SC actions
iii. Exception 2: SC ACTION can take a period of
time to develop and the lowest bar might not
be the biggest and with highest volume
IV. The low of SC defines support line of a TR
iv. AUTOMATIC RALLY:
i. It could take 1-2 days or a period of time
ii. Exhaustion of supply creates an initial rally off
SC low, which is continued later by short
covering at higher prices
iii. The high of the AR defines the resistance line of
a trading range
5. SECONDARY TEST:
i. ST can be a local event to SC+AR
ii. It can occur later as a bigger confirmation
iii. It can create a small trading range as a testing
action
iv. In Phase B, a lower ST can be interpreted as a
potential SOW which indicates more retesting
or more consolidation
6. UP THRUST:
i. NOT only in distribution! (Think
unconventionally and in terms of functionality)
ii. It leaves a trading range above resistance and
quickly comes back – failure and supply
CHEAT SHEET
(Accumulation: Phases C, D and E)
1. INTENTIONS behind Phases C, D and E:
i. Phase C: TEST
ii. Phase D: MARKUP in TR
iii. Phase E: MARKUP outside of TR
2. WYCKOFF EVENTS:
i. Phase C: Spring/shakeout, failed spring, test of
a spring, LPS
ii. Phase D: LPS, SOS, BUC
iii. Phase E: up trend
3. SPRING:
i. Testing of Phase A and B lows
ii. Will either fail or reverse (down or up)
iii. Different types: 1-2-3
4. FAILED SPRING:
i. Spring action that fails to reach the lows of the
range
ii. This is a sign of strength!
iii. It could be also labeled as an LPS, but the
principle is that of a spring
iv. The high of AR defines the resistance line of a
trading range
5. SHAKEOUT:
i. Sharp decline on big spread and volume.
ii. Deep penetration of support level
iii. Quick recovery
iv. Requires a test to act upon
6. SOS:
i. Traveling to higher levels of the range on
bigger spread and increasing volume (usually)
ii. New higher highs, higher lows
iii. Penetration of the resistance level of a range
7. LPS:
i. Higher low
ii. Inability to go lower – SOS
iii. There could be quite a few LPS(s)
8. BUC:
i. Last big reaction before the Markup
ii. No more than 50% price reaction is preferred
CHoCH - Change of Character
When does a trend change into consolidation?
How can we observe this change in enviroment?
Change of Character coming out of a trading range – the largest move (swing) in the direction
of a future trend with the following traits:
1. Largest swing move within a trading range (compared to previous same-directional swings)
2. Occurrence of this move in Phase D
3. Commitment of price above/below current trading range’s resistance/support lines
4. Improvement/Deterioration of Relative Strength leadership
CHEAT SHEET
(Accumulation: Phases A and B)
1. INTENTIONS behind Phases A and B:
i. Phase A: STOP
ii. Phase B: SUPPLY/DEMAND
2. WYCKOFF EVENTS:
i. Phase A: PS, SC, AR, ST
ii. Phase B: UT, ST and ST as SOW
3. PRELIMINARY SUPPORT:
i. First attempt to stop a decline
ii. It always fails as price goes lower to SC low
4. SELLING CLIMAX:
i. Big spread / big volume
ii. Exception 1: Contracting supply on continuous
lower SC actions
iii. Exception 2: SC ACTION can take a period of
time to develop and the lowest bar might not
be the biggest and with highest volume
IV. The low of SC defines support line of a TR
iv. AUTOMATIC RALLY:
i. It could take 1-2 days or a period of time
ii. Exhaustion of supply creates an initial rally off
SC low, which is continued later by short
covering at higher prices
iii. The high of the AR defines the resistance line of
a trading range
5. SECONDARY TEST:
i. ST can be a local event to SC+AR
ii. It can occur later as a bigger confirmation
iii. It can create a small trading range as a testing
action
iv. In Phase B, a lower ST can be interpreted as a
potential SOW which indicates more retesting
or more consolidation
6. UP THRUST:
i. NOT only in distribution! (Think
unconventionally and in terms of functionality)
ii. It leaves a trading range above resistance and
quickly comes back – failure and supply
CHEAT SHEET
(Accumulation: Phases C, D and E)
1. INTENTIONS behind Phases C, D and E:
i. Phase C: TEST
ii. Phase D: MARKUP in TR
iii. Phase E: MARKUP outside of TR
2. WYCKOFF EVENTS:
i. Phase C: Spring/shakeout, failed spring, test of
a spring, LPS
ii. Phase D: LPS, SOS, BUC
iii. Phase E: up trend
3. SPRING:
i. Testing of Phase A and B lows
ii. Will either fail or reverse (down or up)
iii. Different types: 1-2-3
4. FAILED SPRING:
i. Spring action that fails to reach the lows of the
range
ii. This is a sign of strength!
iii. It could be also labeled as an LPS, but the
principle is that of a spring
iv. The high of AR defines the resistance line of a
trading range
5. SHAKEOUT:
i. Sharp decline on big spread and volume.
ii. Deep penetration of support level
iii. Quick recovery
iv. Requires a test to act upon
6. SOS:
i. Traveling to higher levels of the range on
bigger spread and increasing volume (usually)
ii. New higher highs, higher lows
iii. Penetration of the resistance level of a range
7. LPS:
i. Higher low
ii. Inability to go lower – SOS
iii. There could be quite a few LPS(s)
8. BUC:
i. Last big reaction before the Markup
ii. No more than 50% price reaction is preferred