TSLA - Ready for next leg up
This chart highlights a clear reaccumulation structure, following Wyckoff’s method. Here’s a breakdown of each phase, with vector candles confirming the price action.
PS (Preliminary Support): Initial buying interest begins after a downtrend. Volume increases as smart money steps in to absorb supply, marking the start of reaccumulation.
BCLX (Buying Climax): The price surges higher, forming the upper boundary of the trading range. Larger bullish vector candles and high volume indicate strong buying pressure but a temporary exhaustion of demand.
AR (Automatic Rally): The price moves downward, establishing the lower boundary of the trading range. Volume decreases as selling pressure is absorbed by buyers, with bearish vector candles forming.
ST (Secondary Test): The price tests the range but doesn’t reach the BCLX high. Lower volume and smaller bullish vector candles indicate that demand is building as supply diminishes.
Creek: The price drifts lower under sloping resistance (the Creek), unable to break above. Alternating small vector candles and low volume show indecision as buyers and sellers remain balanced.
Spring: The price briefly dips below support, forming a bear trap. Large bearish vector candles with long wicks confirm a swift recovery as demand absorbs remaining supply.
JAC (Jump Across the Creek): The price jumps above resistance. Larger bullish vector candles and increasing volume signal buyers have regained control.
Test: A low-volume pullback tests new support. Smaller vector candles show that selling pressure is weak, confirming the market’s readiness to move higher.
SOS (Sign of Strength): The price breaks out of the trading range with strong bullish vector candles and increasing volume, signaling the start of a new bullish trend.
LPS (Last Point of Support): The price falls to the lower boundary, confirming support. Smaller bearish vector candles with declining volume show that selling is minimal and buyers are stepping in to accumulate shares.
Key Observations:
Price Finding Support Above Resistance: After retesting the previous resistance, the price holds, with smaller vector candles confirming weak selling pressure. This signals that the market is poised for a move higher.
Increasing Buy Volume After LPS: The upward move following the LPS is accompanied by rising buy volume. Larger bullish vector candles confirm growing demand, indicating that the market is ready to break out of the reaccumulation range.
Role of Vector Candles in the Reaccumulation Phase
Vector candles provide clear insight into the shifting momentum between buyers and sellers during each phase. Larger, stronger green candles during the JAC and SOS phases confirm the strength of the bullish move, while smaller candles during the Test and LPS phases suggest that selling pressure is fading. This visual representation of market dynamics supports the view that the reaccumulation phase is complete, and the market is ready for another bullish leg.
PS (Preliminary Support): Initial buying interest begins after a downtrend. Volume increases as smart money steps in to absorb supply, marking the start of reaccumulation.
BCLX (Buying Climax): The price surges higher, forming the upper boundary of the trading range. Larger bullish vector candles and high volume indicate strong buying pressure but a temporary exhaustion of demand.
AR (Automatic Rally): The price moves downward, establishing the lower boundary of the trading range. Volume decreases as selling pressure is absorbed by buyers, with bearish vector candles forming.
ST (Secondary Test): The price tests the range but doesn’t reach the BCLX high. Lower volume and smaller bullish vector candles indicate that demand is building as supply diminishes.
Creek: The price drifts lower under sloping resistance (the Creek), unable to break above. Alternating small vector candles and low volume show indecision as buyers and sellers remain balanced.
Spring: The price briefly dips below support, forming a bear trap. Large bearish vector candles with long wicks confirm a swift recovery as demand absorbs remaining supply.
JAC (Jump Across the Creek): The price jumps above resistance. Larger bullish vector candles and increasing volume signal buyers have regained control.
Test: A low-volume pullback tests new support. Smaller vector candles show that selling pressure is weak, confirming the market’s readiness to move higher.
SOS (Sign of Strength): The price breaks out of the trading range with strong bullish vector candles and increasing volume, signaling the start of a new bullish trend.
LPS (Last Point of Support): The price falls to the lower boundary, confirming support. Smaller bearish vector candles with declining volume show that selling is minimal and buyers are stepping in to accumulate shares.
Key Observations:
Price Finding Support Above Resistance: After retesting the previous resistance, the price holds, with smaller vector candles confirming weak selling pressure. This signals that the market is poised for a move higher.
Increasing Buy Volume After LPS: The upward move following the LPS is accompanied by rising buy volume. Larger bullish vector candles confirm growing demand, indicating that the market is ready to break out of the reaccumulation range.
Role of Vector Candles in the Reaccumulation Phase
Vector candles provide clear insight into the shifting momentum between buyers and sellers during each phase. Larger, stronger green candles during the JAC and SOS phases confirm the strength of the bullish move, while smaller candles during the Test and LPS phases suggest that selling pressure is fading. This visual representation of market dynamics supports the view that the reaccumulation phase is complete, and the market is ready for another bullish leg.
Comment
On this chart, we can clearly see the Secondary Test (Phase B) breaking through the previous support level, which signaled a potential Spring. In Wyckoff methodology, when a Secondary Test breaks support, it often indicates that sellers are temporarily overwhelming buyers, but this is typically a shakeout phase. This leads to a Spring, where the price is pushed lower to absorb the remaining supply before reversing.
That’s exactly what happened here—after the Secondary Test broke support, the price rebounded in a strong Spring, followed by an increase in volume, confirming that buyers stepped in to absorb the supply. The volume during the Spring further validates this action, showing a clear shift in control back to the bulls.
The demand line is also intact and has been respected throughout the reaccumulation process, providing further support for the idea that buyers are still in control. A rising demand line typically indicates that even during retracements, the buyers are stepping in at higher levels, suggesting strength in the market.
From here, I expect Tesla to form a Sign of Strength (SOS) as it tests the resistance at $262-$265. If that level is broken, it should lead to a continued mark-up phase. As always, I'll be keeping an eye on volume and price action near supply levels to confirm the next leg up.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.