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At 08:19 AM 5/30/2001 -0600, you wrote:
>Tim, do you have a set of guidelines you use in identifying coils: minimum
>number of bars, percentage retracement of preceding move, minimum time
>frame, etc.?
Good morning, Earl!
I actually am doing work by hand on 13 and 39 min charts of the S&Ps and
Nasdaq and 30 year bond markets to try to "formalize" my definition and
also refine some measuring statistics I have that were built on end of day
coils. I expect coils in general to have 5 "touches" or alternate closes
before they breakout. By an "edge," I mean that if I am able to pick a side
as the coil is just beginning to form, I can often get great trade location
if I am willing to sell at levels even outside the coil's highs [in a sell
side example]. So if a newly forming potential coil has confluence above it
or a strong fib cluster or a down sloping Median Line above it, I will
often try to sell any approach back to the first high bar after price makes
an initial low [I hope this makes some sense]. If I choose a side, I have
no need to wait for the third or fourth or fifth leg before entry--which is
how most break out traders trade a consolidation pattern.
I am seeing good results with measuring statistics and I am hoping that the
end of day technique will translate well into a measuring technique that
allows a useful price projection series solely based upon the number of
touches and the width of the coil.
Best,
Tim Morge
www.medianline.com
>Also, when you refer to "trading against the edge" of a coil, I
>assume that in the case of a decline you are referring to selling against
>the high of the coil - do I assume that this means you require a retracement
>to establish the upper bound, decline to establish the lower, then sell the
>rally by fading the next retracement a couple of handles short of the upper
>bound?
>
>Earl
>
>
>
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