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Trend exhaustion signals
Climactic bars, divergence in structure, decaying impulse.
9 min · Intermediate
What you'll learn
- Recognize three exhaustion signals: climactic bars, structural divergence and decaying impulse.
- Measure impulse legs to see whether a trend is losing strength.
- Adjust trade management with partial exits and tighter trailing stops when exhaustion appears.
Key takeaways
- Exhaustion is about fading fuel, not calling the exact top.
- Climactic bars, structural divergence and shrinking legs are the key signs.
- Measure each impulse leg to make decay visible.
- Respond by stopping adds, taking partials and tightening the trail.
- Exhaustion alone is not a reason to reverse and short.
Glossary
- Climactic bar — An unusually large, high-volume candle late in a trend that often marks exhaustion.
- Decaying impulse — A trend whose successive legs are getting smaller and more overlapping.
- Structural divergence — New highs or lows that are weaker than prior ones, showing the trend is losing control.
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