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Originally posted by Goblin
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THE COILED SPRING Market Type This setup is best used in:Characteristics This is sometimes known as a bull flag or bull pennant setup and sometimes as a symmetrical triangle pattern, depending on the shape of the coiled spring. The premise of the coiled spring is that after a strong run-up, a strong stock likes to take a breather as it consolidates the ramp-up in price. A weak stock will sell off, giving back much of its gains. But a strong stock likes to coil up in a sideways movement. As it does so, price tends to trend inside an ever tighter range the spring coils up tighter and tighter until shares are ready to climb again. When the coil finally springs open, it usually does so with a delightfully profitable burst of upward momentum.Definition The coiled spring gets its name from the narrowing range the stock trades in over the last seven to twenty trading days as shares consolidate at or near its new high. This range can trade sideways or it can downtrend slightly, but it should not be trading at an upward angle. The key to the pattern is that the trading range, in general, is getting tighter and tighter.Key Indicators The pattern relies on a precise definition of what is intended by coiled spring. Here are the parameters:• Buy signal: The coiled spring itself puts the stock on the shortlist. A break of the trend line drawn over the tops of this coil marks the buy signal. A close below the lower trend line negates the coiled spring, remove it then from the shortlist.
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Thanks for the time and effort to post but best I stick with fundamentals and charts in my more simple way @Goblin
