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    Reversal Days: Buying & Selling Climax: Charts

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    dyadav00
    1) Climax Principal helps identify trend reversals. Reversal days occur at tops or bottoms and signal a possible trend change. 2) A bottom reversal day occurs in a downtrend when price hits a new low but closes above the open, indicating absorbed selling pressure. 3) A top reversal day happens in an uptrend when price makes a new high but closes below the open, signaling weakened buying momentum. Wider ranges and heavier volume on reversal days point to more reliable trend shifts.

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    Reversal Days: Buying & Selling Climax: Charts

    Uploaded by

    dyadav00
    203 views7 pages
    1) Climax Principal helps identify trend reversals. Reversal days occur at tops or bottoms and signal a possible trend change. 2) A bottom reversal day occurs in a downtrend when price hits a new low but closes above the open, indicating absorbed selling pressure. 3) A top reversal day happens in an uptrend when price makes a new high but closes below the open, signaling weakened buying momentum. Wider ranges and heavier volume on reversal days point to more reliable trend shifts.

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    Reversal Days

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    Reversal Days

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    1) Climax Principal helps identify trend reversals. Reversal days occur at tops or bottoms and signal a possible trend change. 2) A bottom reversal day occurs in a downtrend when price hits a new low but closes above the open, indicating absorbed selling pressure. 3) A top reversal day happens in an uptrend when price makes a new high but closes below the open, signaling weakened buying momentum. Wider ranges and heavier volume on reversal days point to more reliable trend shifts.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    203 views7 pages

    Reversal Days: Buying & Selling Climax: Charts

    Uploaded by

    dyadav00
    1) Climax Principal helps identify trend reversals. Reversal days occur at tops or bottoms and signal a possible trend change. 2) A bottom reversal day occurs in a downtrend when price hits a new low but closes above the open, indicating absorbed selling pressure. 3) A top reversal day happens in an uptrend when price makes a new high but closes below the open, signaling weakened buying momentum. Wider ranges and heavier volume on reversal days point to more reliable trend shifts.

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    Reversal Days: Buying & Selling Climax

    When it comes to technical analysis, at times we found ourself searching for


    something which really works. Something which can really turn it all around. I
    don't know how many of you have heard of this principle before but I can
    assure you this is something which is going to work almost all the time.
    Whenever, this pattern will occur on the charts, the next moves will be
    exactly the same as we are going to learn now. So, without wasting another
    second of your previous time. Let's move straight away to the concept.

    Climax Principal is basically a important concept that helps us to spot trend


    reversal. This particular chart formation goes by different names top reversal
    day/ down reversal day/ buying climax/ selling climax etc. First of all let's
    understand what is reversal day.

    Reversal day usually occurs either at the top or the bottom of the chart.A top
    reversal day can be defined as the setting up of a new high in a uptrend,
    followed by a lower close on the same day. In simple words, the price moves
    up during the day establishing a new high but at the end weakens and closes
    below the open price. A bottom reversal day occurs during adowntrend the
    price moves to a new low during the day and at the end recovers and closes
    above open price.

    Wider the range and heavier the volume on reversal days greater would be
    the significance of trend reversal. The reversal days or buying/selling climax
    may not be the final high or low in a trend but they signal a possible reversal
    of trend. Let's have a look at the following chart showing bottom reversal or
    selling climax.
    The main idea behind bottom reversals is that at during such lows the sell off
    starts getting absorbed by the buying pressure which gets reflected in the
    chart. Hence, the trend reverses upwards.
    On the other hand top reversal or buying climax occurs in a uptrend as can be
    seen from the following chart the price moved to new high and yet closed
    lower than the opening price depicted by dark candle. This point is major
    signal of trend reversal.
    Selling climax in PG:

    Another point to put here is that buying and selling climax works only when
    we have a clear trend on the charts. In case of sideways trend its better not to
    draw any conclusions.
    Few more examples:
    To sum it up:

    1) In a downtrend, the price should move downwards during the day,


    establishing a new low and then close above the open price.

    2) In a uptrend, the price should move upwards establishing a new high and
    then close lower then the open price.

    3) The price movement should be spread over a larger area means the high or
    low established during the day should be atleast 7-8% more than previous
    high/ low on the charts followed by a close against the trend.

    4) Higher the volumes on reversal days more significant will be the results of
    this principle

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