Let’s make it simple
A spring can store energy when squeezed. The book uses that picture for narrowing price movement. It is a memory aid, not a law saying that markets must behave like springs.
Understand the idea
Compression describes a period of smaller or narrowing ranges. A triangle can form when high areas get lower while low areas get higher. A flat boundary with an opposing sloping boundary is another possible arrangement.
Expansion means the observed ranges become larger. After compression, price may expand upward, downward or remain quiet longer. There is no guaranteed release time, direction or profit.
Instead of predicting an explosion, mark the narrowing boundaries and write different possible endings. If the picture is unclear, do not stretch the lines to force a triangle. The scale and the chosen starting point affect what you see.
Read exact candle values
| Candle | Open | High | Low | Close |
|---|---|---|---|---|
| A | 10 | 16 | 4 | 12 |
| B | 12 | 14 | 6 | 10 |
| C | 10 | 12.5 | 7.5 | 11 |
| D | 11 | 11.5 | 8.5 | 10 |
A small worked example
Ranges of 12, 8, 5 and 3 tokens describe shrinking movement. A next range of 2 would mean compression continued. A next range of 10 would mean range expanded, but you would still need its open and close to describe direction.
Your turn
Draw a triangle around four narrowing candles. Sketch three possible next candles: UP expansion, DOWN expansion and another small candle.
Compare your exercise with a model response
Draw shrinking boundaries. Show a larger UP candle, larger DOWN candle and another small candle as alternatives.
Pause & think
Check your understanding
Write an answer, then compare it with the explanation. This is self-study, not an automatically graded test.
Compare all three answers to unlock the review button.
Fictional examples. Education only; no pattern guarantees a result. Course information