2) events:
Phase |A|
- preliminary support (PS).
- stopping action- selling climax (SC).
- automatic rally (AR).
- secondary test (ST).
the above are the most important events in Wyckoff accumulation. they have to occur in this sequence only. if they are not there or one of them is missing the accumulation may be happening but is not readable technically as per this method.
1) preliminary support (PS)- this is the first attempt to stop the price from going down in a downtrend. in other words it is some kind of minor climatic action. at times it comes like a tapered reaction swing (more horizontal than a vertical correction) in the downtrend with lots of volume happening, suggesting buying coming in.
substantial buying begins to provide pronounced support after a prolonged down move. volume and the price spreads widen and signal that the down move may be ending in the near future.
2) stopping action (SC)- widespread bar(s) closing in the middle, with ultra high volume and the angel of assent is steep. there is lots of supply but this supply is not of quality. it's a panicky offloading of the stocks, thinking that a much deeper downside is near the corner. on EOD at times there will be some negative news related to the company or industry or economy or some other negative event. PA at times will get oversold in the trend channel or on technical indicators.
there is an exception to the widespread bar, which is a very narrow spread bar with UH volume as SC.. this is known as "bag holding" as per VSA. a very potent signal of SC. it indicates capping of price and absorbing the supply coming in on this bar. the low of the SC bar helps to demarcate the lower level of accumulation TR.
3) automatic rally (AR)- once most of the supply is absorbed on SC, PA without any significant supply will move up impulsively. this happens because of short covering along with contrarian buying by traders/investors. the high of the AT helps define the resistance level at the top of the TR.
4) secondary test (ST)- this is the reaction from the high of AR. it comes to SC (may go below SC, may stop above the low of SC or at the low of SC). ST is basically testing the area of the SC for supply and demand balance. if a bottom is to be confirmed that on ST significant supply should not come and volume and spread on the ST should both decrease as price approaches the SC support level(s). ST of supply may occur multiple times as the TR unfolds. if on ST supply is high it then needs to be again tested to check the supply.
below is the chart of 1M NF -7-12-20 showing these events in phase |A|. it is a difficult example as the price did not stop after ST and moved way below SC low. but the market and PA most of the time do not unfold as per textbook.