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2011issue C0855-59

Wyckoff cause count and spring tests

Congestion between pivot support and resistance is treated as the market's usual state, not a rare pause. Editorial reading: use the five-step sequence as a staged filter so a figure-chart cause, a spring or thrust, and a turn in the Wyckoff wave must all be present before a bar is treated as a hypothesis.

  • Congestion is sideways travel between pivot-defined support and resistance, and later spring, thrust, and trend-change tests are judged mainly at those same zones.
  • Vertical charts are used to read trend direction and the quality of buying or selling tests. Figure charts print X and O columns only after a minimum price change and are used to count a cause.
  • A cause count should match the size of the intended move before a name is selected. Market stance is set from the Wyckoff wave first, and commitments wait for the broader market to turn.
  • Editorial reading: a colored bar is only a falsifiable setup when the cause, the spring or thrust at prior support or resistance, and the wave turn are all in place.
Entries in this reading3 entries
Current trackWyckoff method33 readingsPoint and figure chart56 readingsSupport and resistance227 readings

A box is the starting condition

The archive treats congestion as price oscillating between pivot-defined horizontal support and resistance, and it presents that range-bound state as the market's usual condition. Potential and confirmed springs or thrusts, as well as trend-change labels, are described as depending mainly on those prior zones.

Editorial aim: read the five-step sequence as a staged filter that turns that congestion box into a falsifiable setup, rather than treating a single colored bar as the idea.

The five-step sequence

The Wyckoff method is a five-step tape-reading sequence. It first sets a long, short, or neutral market stance, then ranks relatively strong or weak names, measures a cause, tests readiness on vertical and figure charts, and waits for a market turn.

A Wyckoff wave is a composite index used to judge the market's present position and probable trend before individual names are selected. After the stance is set, candidates are filtered for relative strength in an advance or relative weakness in a decline. Commitments are delayed until the broader market turns.

Cause count on the figure chart

Vertical price-and-volume charts are assigned the task of showing trend direction. Figure charts are assigned the task of estimating how far a trend can run. The figure chart prints X and O columns only after a minimum price change, which is offered as a way to filter noise.

A built-up cause is treated as a figure-chart count. That count should match the size of the intended move before a name is selected. In this workflow, the cause is measured on the figure chart. The vertical chart is not asked to do that job.

Springs, thrusts, and readiness

Readiness is judged with buying and selling tests applied to both vertical bar charts and point-and-figure charts. A spring is a downside probe of prior support used as a readiness test on the vertical chart. A thrust is an upside probe of prior resistance and is the counterpart test.

Those probes live at the same horizontal pivot levels that bound the congestion range. A later trend-change label is described as depending mainly on those zones as well. The box that defined the sideways travel is also the map for the test.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
15 of 21 in the Wyckoff method track
201414-18 pp.Next on Wyckoff methodReading the 2008-14 DJIA as a Composite Operator campaignStudy a long advance as if one Composite Operator accumulates a line, marks it up, and later distributes it into late demand.
All readings on this track · 21 readings
  1. 1986Figure-chart construction, counts, and halfway tests
  2. 1986Constructing Wyckoff trendlines on vertical and figure charts
  3. 1987Stand down or rehearse on paper when a Wyckoff read fails
  4. 1987Wyckoff campaign phases as one enter, exit, or stay-out procedure
  5. 1990Two-bar narrow range as a countdown to the next open
  6. 1991Channel location as a remaining-room test
  7. 1991Swing relative strength versus an index proxy
  8. 1991After a Wyckoff bias, rank leftover cause and keep three-to-one stops
  9. 1991Timing individual issues to general-market turns
  10. 1991Constructing a halfway volume map for range resolution
  11. 1998Wyckoff action sequence as a classroom chart drill
  12. 1999Hand-plotted point-and-figure trendlines and Wyckoff counts
  13. 2000Constructing volume confirmation from recent activity
  14. 2007Diagnose the range on bars, then count it on point and figure
  15. 2011Wyckoff cause count and spring tests
  16. 2014Reading the 2008-14 DJIA as a Composite Operator campaign
  17. 2015Confirm a price-action pivot only after independent signals agree
  18. 2016A double top stays unfinished until candles show control
  19. 2016Wyckoff's early clerkship as a campaign-reading case study
  20. 2016Reading campaign phases as a live drill
  21. 2017Three clocks on the same crowd life cycle
By fieldChart patterns312 readingsBy year2011131 readings
All 33 readings tagged Wyckoff method
Also on Wyckoff method5 readings
2014Reading the 2008-14 DJIA as a Composite Operator campaign1986Constructing Wyckoff trendlines on vertical and figure charts1986Figure-chart construction, counts, and halfway tests1986Force, a tested spring, and the conservative count1991After a Wyckoff bias, rank leftover cause and keep three-to-one stops