Use the Exhaustion Bar to Predict Trend Reversals
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Have you ever spotted a hot stock in a bullish trend and jumped in after a big breakout only to see the stock immediately reverse to the downside and lose you some serious money?
If not, maybe you’ve been lucky, because this has happened to the best of us. But what if I told you there was a way to help stop this from happening? And what if it was so simple, it only required being able to analyze a single candlestick on a chart?
What I’m talking about are exhaustion bars. Exhaustion bars are one-bar, ultra-short term reversal signals, and being able to identify them can save you a lot of money and frustration. Best of all, they’re easy to spot once you know the rules.
In this episode, you’ll learn:
- What an exhaustion bar is, what it predicts, and how it develops (1:12)
- The key features of a bullish exhaustion bar (1:39)
- How volume can help indicate a bearish exhaustion bar (2:25)
The video also features easy-to-read line-art examples of bullish and bearish exhaustion bars, with in-depth explanations to help you get the most out of the video.
There are two important credos that every trade should live by: (1) Never go against the trend, and (2) Never say “never.” Exhaustion bars are cases in which you want to break credo #1 because a reversal is imminent, and statistically speaking, it would be safer to hold off on buying — or even to go short.
Happy Trading!
Manny Backus
CEO, Wealthpire Inc.
P.S. Next week we’ll look at On Balance Volume (OBV), another great momentum indicator to add to your arsenal of technical tools.
Episode 47 – Use the Exhaustion Bar to Predict Trend Reversals
