Price Coil Creates Powerful SP500 Trade Setup
October 4, 2012 at 11:06 PM Price Coil Creates Powerful SP500 Trade Setup
Whenever we see extended price consolidation at a Weekly Trading Zone we anticipate a powerful move. Today was certainly no exception. The most difficult aspect of trading a consolidation, or coil as it is often referred to is patience. Price spent a total of 14 hours coiling at the 1451/1452 Zone before we called an entry based on the hourly chart and a secondary chart pattern which I will be teaching in the near future. Just before the Live Trading Room session ended we suggested that if the market presented the opportunity to buy 1451 on a pullback that the upside potential was significant.
During the 30 minute break which we take each day between the Trading Room and the Emini Daily Radio Broadcast the entry was triggered and the trade only suffered a 2 tick draw down. On the chart below you will see the entry highlighted by the first yellow arrow. The initial target in this case was the previous swing high at 1457.75 which occurred 2 candles prior. Based on recent market ranges an intraday shot at 6.75 points for a 2 point risk is very acceptable. The previous swing low was 1448.75 so using as much as a 3 point stop for a potential gain of 6.75 is still in our book well worth the risk.
emini futures, price coil, sp500 
