Air Pocket

An Air Pocket on a futures chart is best illustrated by looking at it on a chart. The following chart is from the Emini S&P500 for the RTH session on 6 July 2010 and shows price action as 5 minute bars from the open at 9:30am to 12:30pm EST.

An air pocket is formed when a 5-minute price bar breaks out from an overlapping pattern. In an up-move, the start of the air pocket will be the high price before the breakout. The end of the air pocket will be the low of the subsequent bar.

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Air pockets are used as targets or magnets when taking counter trend trades. Traders will expect the air pockets to fill in more often than not.

For an example of how the members of this site used the air pockets as part of their strategy to trade the market on this day have a look at the forum topic ES Short Term Trading 6 July 2010.