Lesson / WY-02-12
A test occurs when price returns to a meaningful area and a new round of trading examines whether the supply or demand previously observed can still move price. A secondary test may follow the stopping of an old trend, and both sides of a range may be tested repeatedly. After a Spring or Upthrust, price may approach the crossing area again. A breakout retest can examine whether the former boundary has changed roles. Tests therefore occur at different stages of structural development; the term is not exclusive to Phase C.
Course content is for learning and research only. It is not investment advice.
Read the Chapter ↗Timestamps
7 lessons · Chapter contents
01Tests: What Is Being Examined, and Where?↗02Supply Tests and Demand Tests↗03Absorption: Active Trading with Little Further Progress↗04Exhaustion: Declining Activity and Diminishing Progress↗05Assessing a Lack of Supply or Demand↗06Reactions and Follow-Through: Testing the Interpretation↗07Confirming Absorption and Exhaustion from Market Evidence↗Observe the market: start with context and place price within its structure.
Understand structure: compare supply and demand, and let evidence support or revise your hypothesis.
Form a view: define risk limits and know when to reassess.
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