| 1234 - 5/5/2015 20:13 Do you have an explanation for how the coil works to store "energy" and then release it with a price move? In your example why does the price need to decline on the exit from the coil? Couldn't it rise on the exit as well? On a separate topic, I have the feeling that speculators can't actually move a market unless psychologically the market is vulnerable. For instance, short selling works because become afraid the price will fall and try to beat the drop by selling thus encourage more selling. In fact, you don't even need producer selling to get a price decline going, just enough short sellers of any stripe. Commercial buyers will get out of the way because they have no incentive to buy until the price reaches a new stable low. Thanks in advance. Hi 1234, They can go either way sure. It all depends on the context they are in. Alot of coils take place as one very large position gets worked off, and another is put on. So, in the case of crude, you have a downtrend, price pops back up, and now the major position will be worked off, and into the opposite. And what better way to finish off your position than push the price out of the coil in the opposite direction, running the stops that are hiding behind unsupported structural levels, stealing those positions to boot. When you think about it, is there really any difference between the 3 years of sideways coiling that led to the collapse in crude, and the little one that just happened? Each served their purpose and have remarkable similarities - they are in fact siblings.
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