Coiled market can be defined as market that has a strong potential of moving in one direction after being pushed strongly in the opposite direction. The idea or the reason behind a market being pushed in one direction is that the market must be pushed in a direction where it belonged regarding its fundamentals however it is pushed into the opposite direction rather being pushed in the right direction. The market being pushed against its fundamentals will make a strong move in order to go back to its fundamentals. The move of the market is called as a coiled move and it is substantially stronger when it is made in the fundamental direction of the market.
The condition of a market entering in a coiled move arises when the market is held down or it is held in an opposite direction in an artificial way. Most of the time such a situation arises in commodity market such as the market of gold and silver. Investors that are looking to invest in coiled market analyze the market by using both the technical and fundamental analysis that what will be future moves of the market and what are the special equities that define the features and characteristics of a coiled market.
The origin of the term coiled market is taken from the concept of the physics that is called coiled and example of a spring is given that more a spring is coiled the more strongly will it rebound or bounce back.