Lesson / WY-02-12
Exhaustion means declining trading activity in the original direction together with weaker net displacement, shorter extensions to new extremes or slower recovery. It differs from absorption, where high volume meets obstruction. It also differs from smooth progress on low volume, which may simply reflect scarce opposing liquidity.
Course content is for learning and research only. It is not investment advice.
Read the Chapter ↗Timestamps
7 lessons · Chapter contents
01Tests: What Is Being Examined, and Where?↗02Supply Tests and Demand Tests↗03Absorption: Active Trading with Little Further Progress↗04Exhaustion: Declining Activity and Diminishing Progress↗05Assessing a Lack of Supply or Demand↗06Reactions and Follow-Through: Testing the Interpretation↗07Confirming Absorption and Exhaustion from Market Evidence↗Observe the market: start with context and place price within its structure.
Understand structure: compare supply and demand, and let evidence support or revise your hypothesis.
Form a view: define risk limits and know when to reassess.
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A Fresh Look at a Single Candlestick
Understanding Volume
