PS—preliminary support, where substantial buying begins to provide pronounced support after a prolonged down-move. Volume increases and price spread widens, signaling that the down-move may be approaching its end.
SC—selling climax, the point at which widening spread and selling pressure usually climaxes and heavy or panicky selling by the public is being absorbed by larger professional interests at or near a bottom. Often price will close well off the low in a SC, reflecting the buying by these large interests.
AR—automatic rally, which occurs because intense selling pressure has greatly diminished. A wave of buying easily pushes prices up; this is further fueled by short covering. The high of this rally will help define the upper boundary of an accumulation TR.
ST—secondary test, in which price revisits the area of the SC to test the supply/demand balance at these levels. If a bottom is to be confirmed, volume and price spread should be significantly diminished as the market approaches support in the area of the SC. It is common to have multiple STs after a SC.
Springs or shakeouts usually occur late within a TR and allow the stock’s dominant players to make a definitive test of available supply before a markup campaign unfolds. A “spring” takes price below the low of the TR and then reverses to close within the TR; this action allows large interests to mislead the public about the future trend direction and to acquire additional shares at bargain prices. A terminal shakeout at the end of an accumulation TR is like a spring on steroids. Shakeouts may also occur once a price advance has started, with rapid downward movement intended to induce retail traders and investors in long positions to sell their shares to large operators. However, springs and terminal shakeouts are not required elements: Accumulation Schematic 1 depicts a spring, while Accumulation Schematic 2 shows a TR without a spring.
Test—Large operators always test the market for supply throughout a TR (e.g., STs and springs) and at key points during a price advance. If considerable supply emerges on a test, the market is often not ready to be marked up. A spring is often followed by one or more tests; a successful test (indicating that further price increases will follow) typically makes a higher low on lesser volume.
SOS—sign of strength, a price advance on increasing spread and relatively higher volume. Often a SOS takes place after a spring, validating the analyst’s interpretation of that prior action.
LPS—last point of support, the low point of a reaction or pullback after a SOS. Backing up to an LPS means a pullback to support that was formerly resistance, on diminished spread and volume. On some charts, there may be more than one LPS, despite the ostensibly singular precision of this term.
BU—“back-up”. This term is short-hand for a colorful metaphor coined by Robert Evans, one of the leading teachers of the Wyckoff method from the 1930s to the 1960s. Evans analogized the SOS to a “jump across the creek” of price resistance, and the “back up to the creek” represented both short-term profit-taking and a test for additional supply around the area of resistance. A back-up is a common structural element preceding a more substantial price mark-up, and can take on a variety of forms, including a simple pullback or a new TR at a higher level.
Note: You'll never get everything as per text book theory. You always need to modify some parts as required. Bookish knowledge and reality is not exact.
Probable profit booking zones. Review the charts at each level, book profit accordingly. Targets are set based on my observations of various stocks like NSE:TANLA, BSE:VENKYS, NSE:MASTEK etc. you can check monthly charts and compare it with this chart.
Your own analysis is expected before taking potions. Blindly following and entering can land you in trouble. Don't get carried away by targets as they are multibagger type. Analyze at each level and book profit accordingly. Nothing works 100% in live market, you need to act accordingly to the changing circumstances.
Hi I am holding at 124 Price. Bought 2 weeks back shall I hold
ekambit
⋅
Good price action analysis, but have you checked the last interview from CEO? We took a short term profit based on technicals, however unimpressive fundamentals for the long term.
varadtambolkar
⋅
@ekambit, based on pure price movement i feel still there's more room. Check chart of tanla, venkys etc. Similar structure.
Plus Copper is nearing a multiyear Breakout on comex. This will surely drive it's margins higher.
Jayarajanpr
⋅
Thanks again for the wonderful analysis and a clean explanation.
One question - Can we observe this patterns and trade on a lower time frame (such as one hour chart). The reason is that I have observed such patterns (I came to know the technical terms such as PS, SC, TR, AR etc. today only when you have explained above). I have done trades on these and most of the times lost on "springs".
Also is it a good trading strategy to identify the upper and lower boundary of accumulation zone (TR) and go for a swing trade (on a lower time frame chart of one hour)? Again I have done this in the past for many times, but most of the time I couldn't do a good trade because of late entry (many times) . So is it a good idea to do such trades in your opinion or is it kind of greedy approach?
varadtambolkar
⋅
@Jayarajanpr, yes it works on lower time frames also. It's perfect to go with such trades as chances of failure are reduced.😁
stuck in it from 170 levels