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Spring and Upthrust Trading Strategy
In this article, I am going to discuss one volume trading strategy which is the Spring and Upthrust Trading Strategy. Please read our previous article Finding Entry Opportunity using Volume Spread Analysis for a better understanding of this article. As part of this article, I am going to discuss the following pointers in detail.
1. What is Spring?
2. Logic Behind spring
3. Some Elements for determining spring
Spring and trend
Spring and volume
Spring and follow-through
5. When should avoid trading spring
6. My trading setup using spring
Spring (opposite upthrust(UT))
- Price dips below support and rallies to close on or near its high and back above support, so there should be a clear minor or major support zone
- Failure to follow through after breaking below support or recent swing low
- All bullish pin bar is not spring but all spring is a bullish pin bar
Spring is an example of a “bear trap”. WHY? Because price drop below support appears to signal resumption of the downtrend. But In reality, the drop marks the end of the downtrend, thus “trapping” the late sellers or bears.
The strength of the sellers can be judged by the depth of the price drive to new lows below the support and the relative level of volume on that penetration.
A spring involves the penetration of a well-defined support level on low or moderate volume .think if a stock going to break the support, it must break with high volume. The spring action shows that the stock trying to break down and failed. It is an important sign of strength
Spring and Trend
During an uptrend
- They will work best in trending conditions. During an uptrend when the bullish signal appears, we go long.
- A retracement to a prior resistance now- support area is a typically excellent trade
- Fibonacci retracement level also worked well
During a downtrend
During a downtrend when a spring signal appears then we need a retest of that spring before we can go long.
- Be sure that prior trends are over
- Background: The background is extremely important. You should see strength in the background with stopping volume or a selling climax or an end of a falling market
- Then appears spring and Spring is Tested
Spring and Volume
Low volume spring
Volume should be lower than the original anchor(where support first occurred ) candle at support when price retrace the first time to support the candle should have low volume than the anchor candle. The shallow price penetration and low volume indicate sellers are exhausted. springs should be bought immediately.
High volume spring
High volume indicates demand coming in, as we trade with the trend, springs should be bought immediately. If we want to trade for trend reversal. High volume indicates the presence of sellers more likely to test immediately or after some rally. In order to justify buying on the test of the spring, two criteria must be met.
- First of all, the volume on the test must be lower than on the spring itself. If it is not, nothing is proven and no buyer should be done.
- Secondly, the price should hold at a higher level on the test than on the spring, It is especially positive if the price supports at or above the support level on the test.
If these two criteria are met, the stock can be bought on the test of the spring. Immediately after the test, the stock should begin a rally.
Spring and Follow-through
WHAT PRICE ACTION SHOULD HAPPEN AFTER SPRING? If a spring fails to rally away from the SUPPORT and the price hangs near the Spring low, then Something is likely wrong
WHEN SHOULD AVOID TRADING SPRING
Context or background move
In a Downtrend where supply is dominated. the swing down to Spring has supplied (price decreasing and volume increasing) compare to demand swing, the odds of success are low
Momentum should be lost when approaching support and the spring indicate strength this is a good context. If momentum increases when approaching support and the next is a spring, the context is not showing strength and the spring should be seen in the suspect
Last demand swing
Shortening of thrust. Thrust Refers to the distance between the current swing high to a previous swing high (in an uptrend) or swings low (in a downtrend). Increased thrust is a sign of potential trend strength. Shortening of Thrust is a sign of potential trend weakness. If the last swing high is characterized by diminishing demand(price increasing and volume decreasing ) odds for success are lower
My SPRING SETUP(opposite for upthrust)
Trend continuous setup
- WELL DEFINED SUPPORT
- Last swing low or resistance turned into support
- Fibonacci retracement level (50-61.8%)
- 5 minutes
- Both stock and index
Context or background
- Market in a defined uptrend
- Cleared support level
- Low volume when approaching support level
Set up condition
- Price retrace towards support on low volume
- Spring at the confluence of support plus vwap (strong signal) or spring at support
- Buy above the spring
- Or Test of spring
- Below the spring
- Next resistance
- Or any bearish reversal price action
In the next article, I am going to discuss VSA (Volume Spread Analysis) Trading Strategy in detail. Here, in this article, I try to explain Spring and upthrust Trading Strategy. I hope you enjoy this Spring and upthrust Trading Strategy article. Please join my Telegram Channel and YouTube Channel as well as my Facebook Group to learn more and clear your doubts.
11 thoughts on “Spring and Upthrust Trading Strategy”
Sir hats off to your work.please give some set of rules which trader should follow before taking a trade.because execution is very important thing in tradaing so please provide us some tips on rules.
Usually you say resistance and support is a zone and not a single price level. In all of your above charts you have drawn them as levels. So what is the criteria to draw such lines and not consider then as zones. Because only then we can identify spring and uprhrust and not confuse them as only pinbars ( you did mention all springs are pin bars but all pin bars are not springs )
Do read support and resistance article. Mentioned about level and zone
Can we use this for both intraday and for swing trading .?
Also I think we can add one more check to make it a high probability trade, when the same stock makes and upthrust or buying climax and there is a failed test followed later, high volume testing , so this provides an additional confirmation when the price makes a selling climax with spring , shows sign of strength to go bullish ….kindly confirm
Yes I am discussed trend continous setup .trend reversal set up is good for swing trading. Intraday trading is about trend trading .go with momentum. Will discuss more about swing trading
Sir ji can we use intraday and for swing trading
and pls add more intrday example trade with marking in uptrend and downtrend
and sir ji we also check volume ?
Thank you sir
Never seen such an excellent training in paid courses also. Kudos to Teacher
I enjoyed reading your article about the spring and upthrust candlesticks. I saw that when I was analysing my price movements. But, I kept wondering what to call a candle wick, which breaks above resistance, and below support lines respectively. Now I know that they are called upthrust and spring respectively.
Very nicely explained, news concepts learned today. 1 question can we use options chain to determine strength and weakness of the the trend
I have been looking really hard for these kinds of lessons – Wyckoff and SM related trading strategies.
And now here they are well explained and for free.
Thank you so much for your generosity, these are gold!