Strategies School / Classic Methods

Wyckoff Accumulation and the Spring

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Read how large players build positions in a range and trade the spring and sign of strength.

What it is

The Wyckoff method describes how large operators accumulate a position in a range before a markup. Key events include the selling climax (SC), automatic rally (AR), secondary test (ST), spring, sign of strength (SOS) and last point of support (LPS).

A spring is a brief break below the range low that quickly reverses. It shakes out weak holders and shows that supply has been absorbed.

The model is a framework. Real charts are messier, so look for the overall story: effort, result and absorption.

How to spot it

  1. Identify a trading range after a decline and mark its high and low.
  2. Look for a spring: a break below support that closes back inside.
  3. Wait for a sign of strength: a strong move above the range middle on higher volume.
  4. Buy a backup or last point of support above the range high.

Trade plan

  • Entry: On the test of the spring, or on the backup after the sign of strength.
  • Stop loss: Below the spring low.
  • Target: The top of the range and then the measured move from the range height.

Common mistakes

  • Wrong: Calling every range accumulation. Right: Require a prior decline and signs of absorption.
  • Wrong: Buying the first dip under support. Right: Wait for the close back inside the range.

Pro tip: Volume helps: a spring on low volume that quickly recovers is a better sign than a break on huge selling volume.

Quiz

  • A Wyckoff spring is: Answer: A brief break below range support that reverses. It shakes out weak holders and recovers.
  • SOS stands for: Answer: Sign of strength. A sign of strength is a strong move out of the range.
  • A spring is more convincing when: Answer: It reverses quickly back inside the range. A fast recovery shows absorption.

Educational content, not financial advice. Diagrams are illustrations, not real market data.