Wyckoff and Tests

Hi Guys,

I’ve been looking into Wyckoff methodology and have been reading up on some chart commentary that uses Wyckoff for chart assessment.
During this chart commentary, I’ve come across the term ‘testing’ and have some confusion as to what this actually means. I understand that the CO (Smart Money) ‘tests’ the market for supply before they mark up price, so there is no resistance to higher prices that will undo their price markup campaign.
Some queries I have regarding tests include:

  1. What is the definition of a test?
  2. What is the purpose of a test?
  3. Where would we expect tests to occur on a chart eg. only after climatic action (Selling Climax or Buying Climax); Upthrusts; Springs?
  4. How do we identify a test?
  5. How do we assess the result of a test ie. successful or unsuccessful test?
  6. Are Upthrusts and Springs tests in themselves or only action of price, that then needs to be tested by assessing the ensuing price action?
  7. Most chart commentary I’ve read is the testing of supply ie. when price has rallied off a swing low, reacted to retrace back towards the swing low - that is, ‘testing of the lows’. Do we ever have ‘testing of the highs’ ie. testing of swing highs? If we do test the swing highs, are we testing for supply or are we testing for demand?

Look forward to hearing from you seasoned trading peeps!
Hi @naviafra, including yourself as I saw you had a post re: Wyckoff some time ago. Hope you can contribute and clarify some items for me!

1 Like

I’m currently working on some study material to explain most of the actions during supply demand analysis. It’s not all finished but it’s totally free and you can start going through it on fxnavid (dot) com

But one tip. Don’t put too much effort on Wyckoff. It’s better on stocks than in forex as we lack volume in forex

Hi @naviafra, thanks for the reply. I headed over to your website and read your document (I assume it’s the ‘Understanding Forex charts using a microeconomic approach’) - it’s a good read outlining the fundamentals of supply and demand. The section on Support and Resistance gave me a good insight into what true resistance and support levels are ie. as opposed highest high or lowest low.

Will your document have a section on ‘Testing’ by any chance?

Good work, I look forward to reading more as you progress with the doc. Thanks for sharing!

There’s loads of Great information on this forum about all of your questions - There’s really no need to go see what an amateur has to say on a different website even when the Sock-puppet gives him a reference !

There’s more understanding HERE than you will get from these 2 !
.

It is a five-step method of market analysis for decision making. You can use it to determine the present position and probable future trend of the market.