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When tops are formed , two things happen The public is buying and the big boys are selling, and vice-versa when bottoms are formed.
In simple words Volume climax is the last "AHA" movement for the public before the stock make a top or bottom.
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In simple words Volume climax is the last "AHA" movement for the public before the stock make a top or bottom.
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What is Volume climax?
• Volume climax appears at the extreme of a trend, or when top or bottoms are formed.
• Most of the time volume climax appears when breakouts happens after a long extending move, and then fails to hold at higher levels.
• Volume climax appears at the extreme of a trend, or when top or bottoms are formed.
• Most of the time volume climax appears when breakouts happens after a long extending move, and then fails to hold at higher levels.
• In this, at time of breakout we see big volumes (atleast 2-3X more then normal volume) coming in stock when the stock is already extended.
• More volume is not always good, though retail traders doesn’t distinguish between them.
• More volume is not always good, though retail traders doesn’t distinguish between them.
• After the Volume climax we may see a top/bottom or at-least the trend becomes sideways.
• The best setups are those in which we see full reversal candles with big range.
• The best setups are those in which we see full reversal candles with big range.
Example of volume climax-
1. The stock was in Uptrend, And has give a quite good run , Stock was giving a big move as you can see in last 2 candles, they were super extended.
2. But at the top candle, the bulls lost the control and the stock closes with a weak candle,
1. The stock was in Uptrend, And has give a quite good run , Stock was giving a big move as you can see in last 2 candles, they were super extended.
2. But at the top candle, the bulls lost the control and the stock closes with a weak candle,
and the candle was formed with high volume almost 2X of normal volume.
3. This is a recipe for a volume climax setup, though I use it for exiting my positions if I have any prior to the this move.
4. In this setup, Wait for the second candle to close ,
3. This is a recipe for a volume climax setup, though I use it for exiting my positions if I have any prior to the this move.
4. In this setup, Wait for the second candle to close ,
because most of the times if the trend is to continue it will continue in next candle.
Another example-
Another example-
So, Now we have talked about the setup, but don’t this fail and how can we know it when it do fail?
• First when should we not use it ?
1. When the stock shows Extremely high volume but the candles closing have strength then its not considered volume climax.
Example-
• First when should we not use it ?
1. When the stock shows Extremely high volume but the candles closing have strength then its not considered volume climax.
Example-
I Use this as an exiting technique rather then , an entry setup though one can work around with it.
Definitely it will fail sometimes, like any other technique.
Thanks for reading till here,
Cheers,
TRADER KNIGHT
Definitely it will fail sometimes, like any other technique.
Thanks for reading till here,
Cheers,
TRADER KNIGHT
