Most trading frameworks are a list of setups. Oliver Kell's is a loop, and that is the whole idea: the six patterns he names are not alternatives you pick between, they are consecutive stages of one repeating cycle, so knowing which stage you are in tells you what comes next and what to do about it.
Kell won the 2020 US Investing Championship in the stocks division with a return of 941%, and published the framework as the Cycle of Price Action. This guide walks each stage, gives the moving averages the whole thing hangs on, and separates the parts a backtest can reach from the parts it cannot.
A note on integrity before we go further: InvestingPaths is an independent research site and is not affiliated with, endorsed by, or connected to Oliver Kell or Kell Trading. Everything below is our summary of publicly documented material, attributed as such. Trading involves substantial risk of loss, and nothing here is financial advice or a promise of any result. A championship return earned by a full time professional over one year, in one of the most favourable markets for momentum trading in living memory, is not a forecast of what a framework does in other hands or other years.
The two moving averages everything hangs on
Before the setups: the reference is the 10 and 21 period exponential moving averages. Not 20, not simple. Every stage below is defined by where price sits relative to that pair, whether the pair is rising, and how far price has travelled away from it.
That is a deliberately small toolkit, and it is the reason the framework travels well between timeframes. The cycle is usually taught on daily bars; practitioners apply the same lens to hourly charts on the same logic.
The cycle, stage by stage
| Stage | What it looks like | Where you are in the cycle |
|---|---|---|
| Reversal extension | Capitulation. Price far below the moving averages, heavy selling, fear | The bottom |
| Wedge pop | The first reclaim of the 10/21 EMAs after a downtrend, often on tight action | The turn |
| EMA crossback | The first pullback to the 10 or 21 EMA after that initial rally | The first buyable pullback |
| Base and break | Consolidation on the moving averages, then a breakout | Trend continuation |
| Exhaustion extension | A near vertical move, price far above the averages | The top |
| Wedge drop | Loss of the moving averages after the extension | The exit |
Read them in order and the argument becomes obvious. Fear at the bottom produces the reversal extension; the first buyers show up and reclaim the averages in the wedge pop; the first pullback into the averages is the crossback, which is the lowest risk entry in the cycle because the invalidation level is inches away; bases and breaks then carry the trend; greed produces the exhaustion extension; and the wedge drop is the same signal as the wedge pop with the sign reversed.
The framework's real claim is about position within the cycle, not about pattern recognition. The same chart shape means different things at different stages. A break to new highs from a base is continuation; the identical looking break after an exhaustion extension is where you take profit. That is the part a screenshot of a pattern cannot teach you.
Why the EMA crossback gets most of the attention
Of the six, the EMA crossback is the one written about most, and the reason is risk placement rather than hit rate. After a stock has rallied hard off a low, the first pullback to the 10 or 21 EMA gives you a defined level: if the moving average fails, you are wrong immediately and cheaply. Entries taken at extension have no such level, which is why the same percentage stop means something completely different in the two cases.
The word doing the work is first. A first pullback in a young trend is a different animal from the fifth pullback in an extended one, and the framework is explicit that later crossbacks in the same move carry lower odds.
Mark Ritchie II, and the wider championship cohort
Kell is one of several US Investing Championship winners whose methods circulate together, and readers looking him up often land on the others. Mark Ritchie II is the most frequently searched of them: a long time trader and championship competitor who writes about position sizing, risk per trade and the psychological side of holding a winner, rather than about chart patterns. His material is a useful counterweight to a setup catalogue, because the sizing question is what actually determines whether a good setup produces a good result.
The other name that belongs beside these is Mark Minervini, whose Trend Template is the mechanical filter that a Kell style cycle then reads. The two fit together: the template says which stocks qualify, the cycle says where in the move you are.
Building the screen in TC2000
You cannot scan for "which stage of the cycle is this", because that is a reading of a whole chart. You can build the candidate lists each stage produces, which is what a scanner is for. In TC2000:
| Stage | Scan condition |
|---|---|
| Wedge pop | C > XAVGC10 AND C1 < XAVGC10.1, price reclaiming the 10 EMA today |
| EMA crossback | L <= XAVGC21 AND C > XAVGC21 AND XAVGC10 > XAVGC21, a touch of the 21 EMA inside an uptrend |
| Base and break | Tightness first, then C >= MAXH20.1, a break of the twenty day high |
| Exhaustion extension | C / XAVGC21 >= 1.25, price 25% or more above the 21 EMA |
| Wedge drop | C < XAVGC21 AND C1 > XAVGC21.1 |
XAVGC is the exponential average in Worden's formula language, where AVGC is the simple one; using the wrong one is the single most common mistake when porting this framework, and it moves the line enough to change signals. Custom formula conditions need the Premium tier. Our pricing breakdown covers the tiers and the EasyScan guide covers assembling conditions into a saved scan.
Testing the mechanical stages
Three of the six stages are mechanical enough to backtest, and our free backtester expresses them directly:
| Stage | Our rule |
|---|---|
| Wedge pop | Price crosses a moving average, on the 10-period exponential |
| EMA crossback | Corrective pullback, combined with Moving average stack to require the uptrend |
| Exhaustion extension | Distance from a moving average, which is exactly this measurement |
| Base and break | Volatility contraction into Donchian channel break or Pivot break |
The impulse pullback template is the nearest ready made version of the crossback idea, catching the first dip of a new trend, and it runs free with no account.
Three limits to know before you read any number from it:
- "First" is hard to express. The framework's edge is concentrated in the first pullback of a move, and our pullback rule does not count how many pullbacks have already happened. So a mechanical test dilutes the setup with later, weaker instances, which biases the result downward rather than upward. That is the safer direction for a bias to run, but it is still a bias.
- The cycle position is not encoded. A backtest evaluates conditions bar by bar with no notion of "we are late in this move". That context is the framework's central claim, and it is the part that does not survive translation.
- Timeframe. Our engine reads daily bars, so the hourly application of the same lens is out of reach here.
Frequently asked questions
What is Oliver Kell's cycle of price action? A framework describing six recurring stages a trending stock passes through: reversal extension, wedge pop, EMA crossback, base and break, exhaustion extension and wedge drop, all defined against the 10 and 21 period exponential moving averages.
What is an EMA crossback? The first pullback into the 10 or 21 EMA after a stock has rallied off a low and reclaimed those averages. It is favoured because the moving average provides a nearby, well defined invalidation level.
Which moving averages does Oliver Kell use? The 10 and 21 period exponential moving averages, on both daily and intraday charts.
Can the cycle of price action be backtested? The individual stages can be approximated, and three of them map cleanly onto rules in our backtester. The framework's actual claim, that the same pattern means different things depending on where in the cycle it appears, does not translate into a bar by bar test.
How does this relate to Minervini or Qullamaggie? All three are momentum frameworks built on stocks in established uptrends pulling back to short moving averages. The Trend Template is a screening filter, Qullamaggie's method is a scan plus three named setups, and Kell's cycle is a map of where in a move you currently are.
Run the pullback half yourself
The crossback is the stage most worth interrogating, because its whole case is that entering at the moving average beats entering at extension. The impulse pullback template tests that on real daily bars, free and with no account, and the backtester lets you add the moving average stack and extension conditions on top.