What Is a Secondary Test?
After the Automatic Rally, price returns to the area of the Selling Climax. The purpose is to test whether sellers are still active. A good test shows lower volume and a narrower spread than the climax, and it holds at or above the previous low.
What You Want to See
Several tests may occur in Phase B. Each test that holds adds evidence.
- Volume clearly lower than at the Selling Climax.
- Smaller bars and rejection of lower prices.
- A hold above or near the climax low.
ST vs Spring
A Secondary Test normally holds above the low. A Spring breaks below the range support and quickly recovers. Both test supply, but the Spring is more aggressive and usually occurs later in the range, in Phase C.
If the test comes with high volume and weak recovery, the structure may be failing.