A Sign of Strength is a strong rally within or out of an accumulation range that occurs on expanding volume and wide price spread. It confirms that demand has overcome supply and that the accumulation phase is likely complete. The SOS typically breaks above the range's resistance (Creek) and is followed by a Last Point of Support (LPS) pullback.
Strong rally with wide price spread, Expanding volume on the advance, Breakout above the trading range resistance ('jumping the Creek'), Usually follows a successful Spring or Phase C test, Often accompanied by bullish volume divergence
Buy after the SOS confirms a Spring/test sequence, Buy on the LPS pullback after the SOS breakout, Volume should expand significantly on the SOS bar/bars, Compare volume to prior rally attempts within the range (should be highest)
Stop below the most recent support level within the range or the Spring low, Target the measured move (range height added to the breakout point), Trail stops using rising support levels
Daily for the SOS identification, 4H for precision entry on the LPS
A genuine SOS should have notably different character than prior rallies within the range — wider bars, higher volume, and faster pace. If the SOS looks similar to range rallies, it may be a trap.
The Wyckoff Market Cycle consists of four phases that repeat across all markets and timeframes: Accumulation (smart money buying), Markup (trending up), Distribution (smart money selling), and Markdown (trending down). Understanding which phase the market is in helps traders align with institutional flow.
Wyckoff Distribution is the phase where institutional operators sell their accumulated positions into retail buying pressure. Key events include: Preliminary Supply (PSY), Buying Climax (BC), Automatic Reaction (AR), Secondary Test (ST), Upthrust After Distribution (UTAD), Sign of Weakness (SOW), and Last Point of Supply (LPSY).
Wyckoff's nine buying tests and nine selling tests are systematic checklists that traders apply to determine whether an accumulation or distribution trading range has completed its purpose and is ready to transition into a markup or markdown phase. Each test evaluates a specific aspect of price and volume behaviour within the range, providing objective criteria for entering positions at the conclusion of a Wyckoff phase.
Richard Wyckoff's three fundamental laws — the Law of Supply and Demand, the Law of Cause and Effect, and the Law of Effort versus Result — form the philosophical foundation of the Wyckoff Method. These laws explain why prices move, how far they are likely to travel, and whether a move is genuine or likely to fail. Every Wyckoff analysis technique derives from these three principles.