Wyckoff spring and test

What it is

A spring takes price below the low of the trading range and then reverses to close back inside it. It shakes out the last weak holders and triggers the stops under the range, giving large buyers the shares or contracts they need. A deep, fast version is a terminal shakeout.

The spring is usually tested: price comes back down towards it and makes a higher low, on lighter volume. That test is the classic low-risk Wyckoff entry. A spring is close to what smart money traders call a sweep, but it is a late-range event (phase C, after the cause has been built) and is judged on volume.

How to spot it

• A range that has lasted a while, with the cause built in phase B.
• A quick break below the range low that closes back inside.
• A later pullback that holds above the spring low on lower volume.

How to use it

• Buy the test of the spring, or the first sign of strength after it, with the stop below the spring low.
• Target the top of the range first, then the point-and-figure count.

Common mistakes

• Calling any break of a range low a spring; one early in the range is just a test.
• Buying the break itself before it has closed back inside.

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