A selling climax is extreme panic selling. Volume spikes to 3-5× average as capitulation unfolds. The following candle's reversal often marks a major low. Trade the bounce after confirmed climactic exhaustion.
Indicators Used
VolumeATRRSI
Rules
📈 Climax Bounce Long
- Sharp decline over previous 3-10 candles (clearly oversold visually)
- Current candle: volume > 3× 20-period average
- Range > 2× 20-period ATR (extreme volatility)
- RSI(14) < 20 (extreme oversold)
- Next candle closes green with range > average
- Enter long on close of the reversal candle
- Stop: below climax candle's low
- Target: 50% retrace of the decline, 3R minimum
🚫 Skip Setup
- Decline driven by major negative news (ongoing catalyst)
- Multiple climactic candles (each worse than last). Not one capitulation
- Broader market collapsing simultaneously. Idiosyncratic bounces fail in risk-off
3× avg
Volume Spike
2× ATR
Range
RSI <20
Exhaustion
💡 Pro Tip
Selling climaxes fail during genuine crises because the 'catalyst' keeps generating new waves of selling. This strategy works best in technical corrections without fundamental catalysts. In crashes (2008, 2020-Mar, 2022-Q2), each climax just precedes another.