Exhaustion Bar Trade
Exhaustion bar trades signal the end of the move and occur when the buyers or sellers throw in the towel on their bad trades or hesitancy to enter the market on a trade they saw. The key to this possible exhaustion is the increase in volume compared to the volume in the preceding bars. The key is the reversal from these bar’s high or low.
1. The setup was the market had rallied in three waves from 697.50 to 710.50 and the move ended on higher volume than in the preceding bars.
2. The buying volume decreased in the succeeding bar.
3. Trade entry was on the subsequent bar’s close or upon penetration of the exhaustion bar’s low. Entry price was 707.50 to 708.50.
4. The market hit 703 on the first wave of selling and 699 on the second wave of selling.
5. This trade yielded 4 to 9 points in profits depending upon entry and exit prices.
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