Exhaustion bars represent exactly what it sounds: the complete exhaustion of buying or selling pressure driving a trend. These bars usually have a gap in the prior trend’s direction preceding them. The gap, if it exists, indicates all the traders who wanted to support the trend piling in to continue driving it forward.

Unfortunately, Exhaustion bars occur when the majority of the traders driving that position enter together early into the bar. Afterward, there simply aren’t enough buyers (for uptrends) or sellers (for downtrends) to continue pushing the stock in that trend’s previous direction. As a result, the opposing group of traders take control of the asset price and reverse the direction of the trend. This bar usually closes near its opening price and is often followed by a gap that reverses the previous trend.

American Markets Analysis:

• Summaries of American Economic Structure
• Performance of Major
• Imports/Exports
• Federal Reserve Mandate versus Expectations
• Performance Indexes of U.S Economy
• Economically Correlated U.S Dollar Projections
• Large Trading Fund Index Sentiment Readings
• Market Wide Earnings Versus Valuations
• Fundamental Ranking of U.S Business Sectors
• Best and Worst Future Consensus Estimates
• Occasional: Firm Fundamental Strength Report
• List of Technicals to Look for While Trading