In the Wyckoff approach, we are often given two alternatives for something. The price either acts a certain way, or it doesn't. There is either a Selling Climax, or there isn't. There is either a successful test, or there is not. If you have a situation where you can't distinguish between the two alternatives, there is the default course of action which is to do nothing. This is yet another reflection of the Action-Test, Action-Test idea we talked about earlier.

As you approach your figure count objective in a down move, you are anticipating a Selling Climax. You will either have a Selling Climax or you will not. Not all declines are stopped with a Selling Climax, but when they are, it is a principle we can analyze.

Following the selling Climax is the Automatic Rally. Again, you are either going to have a rally or you are not. The nature of the rally depends on how much supply is being pressed on the market. If there is too much supply present, the rally may be short lived or you may simply get a sideways movement. If you don't get a rally, you will probably get a sideways movement after which the downtrend is likely to be resume. The Automatic Rally gets its name because it is not built on an anything substantial. The sellers are all sold out and there is a vacuums that allows for a rally, provide there is not too much supply being pressed on the market. This rally usually only lasts a few days to a about a week.

Automatic Rally