What Is a Selling Climax?
A Selling Climax is a sharp, high-volume drop that exhausts sellers. Fear forces weak holders out, and large buyers use the liquidity to start building positions. It usually appears in Phase A of accumulation.
What It Looks Like
The climax is more reliable on higher timeframes, where participation is deeper.
- A wide-range bar or sequence of bars falling to new lows.
- The highest volume of the decline, often several times the average.
- A close well off the low, showing buyers stepping in.
- A quick bounce, which becomes the Automatic Rally.
How to Trade It
Do not buy the climax bar. It is a clue, not a signal. Mark the low and the rally high, then watch for a Secondary Test on lower volume and a Spring. Enter only after the structure shows evidence that supply has dried up.
A Selling Climax without a later successful test is just a big down day.