medium · Volume Price Analysis
A pennant (symmetrical triangle) forms over ten days with price and volume compressing significantly.
Why is this pattern often referred to as a 'coiled spring' in the context of Volume Price Analysis?
- The compression of price and volume represents a buildup of 'cause' that will result in a rapid 'effect'.
- Because the wicks on the candles are becoming longer, showing rejection.
- Because the market makers are waiting for a news event to jump the price.
- The term only applies if the volume increases during the formation of the triangle.
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