All lessons
SOW and LPSY: weakness, then a weak recovery
A hard fall is visible. Ask whether the next bounce can actually repair it.
Connect a sign of weakness with a later last point of supply.
A sign of weakness is downward progress toward or below range support, often on widening bars and higher volume. It is an observed sequence, not an automatic short order.
LPSY describes a later rally struggling to advance after weakness. Narrow bars, weak upward progress and limited demand may support the bearish interpretation.
Compare where the bounce stops with the broken support and earlier swing levels. Recovery above those levels may weaken your case.
Define invalidation independently of the diagram. A short position needs an exit plan, acceptable position size and execution-cost allowance before entry.
Let’s work through it
- Mark the weakness
- Assess the recovery
- Write entry risk and failure
Let’s use numbers · hypothetical example
After 100–110 range, price falls 98 and bounces 100.5. Hypothetical short 99, stop 101 and target 95 has 2 points risk and 4 points gross reward, or 2R, before costs. A return above 101 invalidates this entry plan.
Easy mistakes to watch for
- Shorting every red bar
- Ignoring a strong recovery
- Moving the stop to save a label
Keep in mind
A weak-looking rally can accelerate upward. Stop-trigger prices and guaranteed fill prices are different things.
Your turn
Replay a bearish continuation and a recovery above 101. Record both before selecting a label.
A quick check before we move on
For short 99, stop 101, target 95, what is gross planned reward?
- 2 points
- 4 points
- 6 points
Check answer
4 points The target is 4 points below entry. Risk is 2 points above entry, so the gross ratio is 2R.
Sources and further reading
- www.wyckoffanalytics.com/wyckoff-method/
- www.cmegroup.com/education/courses/trade-and-risk-management/proper-position-size
Content reviewed: 29 October 2026
Educational material with hypothetical examples. Trading can cause substantial losses. A course, pattern, stop order or past result cannot guarantee a profit or limit every loss. Practise in simulation and check current rules and product terms in your jurisdiction.
