One of the most important and common principles seen in Wyckoff analysis are 'Springs'
They were named springs, because when Richard Wyckoff saw this principle (in the right place), he would say that "price is on the springboard" , potentially ready to bounce up and accelerate away. He said this because when he saw support come in at a certain level, it showed him that price was being defended.....and if price is being actively supported and defended, it would most likely be marked up and the price carried higher in the future.
This principle can be seen quite regularly on charts, and it relatively common, however when seen in the right place it can be quite powerful.
In its most basic form, a spring is seen when price dips below a level where price has previously found support, and instead of breaking down, recovers the lost ground and closes back above this potential support line.
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Perhaps counterintuitively, little tiny shallow springs are generally seen as being more powerful and strong than big fat deep springs.
This is because - if support comes in immediately and with strength when it is challenged, it shows that price is being actively supported and defended, and when this occurs only a little tiny shallow spring is the result. This gives confidence that price is strong and is being defended.
However, if support is slow to react and allows price to push deeply into breakdown territory, before enough strength can be found to push price back up, and back above potential support. It is more likely that the support present may not be very strong, and it could be overwhelmed if repeated or increased supply comes in, which would cause a price breakdown through previous support.
Springs generally work best and are at their most powerful and consistent - in an uptrend - with strength (buying) in the background of the chart - and after a breakout above a trading range.
Spring work worst, or least consistent - in a downtrend - with weakness (selling) in the background of the chart - or after a price breakdown below a previous trading range.
Springs are often thought of as appearing at absolute lows (double bottom), and are also seen after the breakout above a trading range, and during minor pull backs in an uptrend.
Finally, springs can and do fail. And a failed spring can be seen as a sign of weakness in itself.
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cheers
