Climaxes, automatic rallies and secondary tests (PS, SC, AR, ST)

What it is

At the end of a fall, preliminary support (PS) is the first real buying: volume picks up and the drop slows. The selling climax (SC) follows: a burst of panic selling on wide bars and very heavy volume, absorbed by large buyers near the bottom. The automatic rally (AR) is the bounce that follows as selling dries up; its high marks the top of the coming range. The secondary test (ST) revisits the climax area, ideally on lower volume and narrower bars, to check that the selling really is exhausted.

At the top of a rise it's the mirror: preliminary supply (PSY), a buying climax (BC) of urgent buying absorbed by large sellers, an automatic reaction (AR) down that marks the range low, and a secondary test of the high.

How to spot it

• The climax bar is usually the widest and heaviest-volume bar of the move.
• The AR is fast; its extreme becomes the other edge of the range.
• A good ST comes back near the climax on clearly lower volume.

How to use it

• Treat a climax as the end of the trend, not the start of a new one: expect a range next.
• Draw the range from the climax low to the AR high and watch the phase B tests.

Common mistakes

• Buying the selling climax itself; the range usually comes first.
• Calling any big bar a climax without the volume and the AR afterwards.

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