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Wyckoff - The Spring
Richard Wyckoff broke down asset price movements into repeating cycles, with phases of accumulation, markup, distribution, and markdown. During these cycles, periods of sideways consolidation often precede significant directional moves. One key pattern he identified is the Spring - a short-term trading opportunity that occurs when price briefly dips below a well-defined support level (undercutting the range) before quickly rebounding higher. This “spring” traps sellers and signals potential strength as demand overcomes supply.
HOW IT WORKS?
A Spring is a bullish reversal pattern that occurs near the end of a trading range, typically during the accumulation phase. It represents a false downside breakout that traps sellers and signals that smart money is absorbing supply before a move higher.
Key features:
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Trading range forms after a decline (support and resistance established).
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Price briefly breaks below support — this is the Spring.
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The break fails to follow through downward, and price quickly returns back above support, showing demand has absorbed selling pressure.
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Confirmation comes when price rallies on increased volume and holds above support — this is called the test or sign of strength.
Purpose:
The Spring shakes out weak holders and triggers stop-losses, allowing professionals to buy from them before the next markup phase.
HOW TO USE WYCKOFF SPRING?
The Wyckoff Spring works across all timeframes, but it’s especially effective on the daily chart.
When a stock has been falling and begins to form a bottoming range, mark out the high and low of that range. If price briefly dips below the range low — ideally for one to two days only — and then closes back inside the range, that’s your potential Spring setup.
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Entry: Buy on the close of the reversal candle that re-enters the range.
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Stop Loss: Just below the spring’s low.
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Target: The top of the range as your first objective.
You can sell into strength near the top, or hold a core position for a longer-term move if the broader market and fundamentals support it.