Thursday, April 18, 2013

Inverted Wyckoff Spring

Price has entered a sizable TTM Squeeze here overnight. The signal has fired to enter long, however, the shorter interval Ticks show the conclusion of the squeeze is or has already occurred. What we may be seeing here is an inverted Wyckoff Spring. A spring occurs when prices continue to bounce off of support, usually off a low, ultimately giving way to the sellers. The sellers pile on, but with no one left to buy, the market reverses and the shorts are squeezed igniting a significant rally to the upside.

What may be happening here is just the inverse. Price has continued to find resistance above, consolidating and coiling as is visually apparent with the TTM Squeeze Study. Now, the shorts have gotten out of the way and the bulls have piled on, with no one left to buy, price will reverse, creating a bull trap, and a significant move to the downside. Trade What You See, dwb.