I don't think anyone is saying it NEEDS to test the Aug 9 low (XJO). But a successful test ON TOP of the bar at the AUG 9 low would be real nice for the bullish scenario OR ALTERNATIVELY a break out of the range and then a successful test of the breakout. A successful test would be on low volume and spread on a down bar(showing lack of supply/selling pressure) followed by increased volume and spread going up and closing highish. Also, a "jumping of the creek" is often followed by a "back up to the creek" again to test for supply, which in our case would be around the top of our last pivot low which is around the top of our Aug 9 bar. On the DOW we had a #2 spring. (As opposed to a #1 or #3 spring). A #1 spring being, where it doesn't actually spring back up but just keeps going down and doesn't look back and is on real high volume. A #3 spring would be on really light volume and doesn't need to be tested because it has already found "no supply." A #2 spring is somewhere in the middle with high volume - yes less than the Selling climax but still high - this is what we would like to see tested again. But hey - when did the world do what we like? So we don't NEED for the chart to behave as we want, we are just on the look out for clues and good setups either way. Wyckoff would typically look to enter on the successful test of the creek - but never if it occurred within the trading range. (Mitta's more the Wyckoff expert than myself) But also, when in a trading range, if that is what it is, we don't really know if its accumulation or redistribution, but Wyckoff would say as time went on we would see certain clues or patterns emerge. For accumulation we would want to see increasing volume and spread on the rises - and decreasing volume and spread on the dips - so what we have presently on the DOW is the opposite - so we are very wary going long until it breaks out of this range and then we can look out for our successful tests as they occur to enter. You ahve to remember that the purpose of a test is to check for supply - the Composite operator does not want to be having to absorb that supply at higher prices - so now at the top of the range we can only guess if Smart Money are happy to leave that supply behind at the #2 spring (DOW) - or if they want to check it again, or if they have been yanking our chain all along and have been redistributing. So we keep our eyes open for clues as they occur.
And I'll let Mitta step in now and correct all my errors.
(20min delay)