Coiling refers to a specific form of market consolidation where the trading range of an asset becomes increasingly narrow over time, forming a pattern that resembles a coil or a spring. This is often visualized on a chart as converging trendlines, such as in a symmetrical triangle or a pennant pattern.
Coiling is considered a sign of market indecision, as neither buyers nor sellers are able to push the price significantly in any direction. However, the coiling pattern is also seen as a period of accumulating energy, suggesting that a significant price movement is likely to occur once the asset “breaks out” of the coil.
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