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2005issue C021-3

Selling climax holds versus fails

A selling climax is a high-volume washout that can be considered only after a prior decline. Volume-price analysis opens the case, a MACD histogram extreme and price-indicator divergence grade it, and a later break of the climax-day low closes the hypothesis.

  • A selling climax can be considered only after a preceding decline, because that downtrend is what allows forced selling to cascade.
  • Overwhelming volume is the first prerequisite, but a washout session is not automatic proof that a larger bear phase is over.
  • Oscillator positive divergences, MACD-histogram extremes, and bullish reversal candlesticks are listed as ways to grade a suspected climax.
  • Climax lows are usually retested, and a later break of the climax-day low is treated as a reason to abandon the immediate reversal hypothesis.
Entries in this reading3 entries
Current trackMACD115 readingsVolume-price analysis129 readingsPrice-indicator divergence142 readings

A selling climax needs a prior decline

A selling climax is defined as possible only after a preceding decline, because that downtrend is what allows forced selling to cascade.

It is a high-volume washout session treated as a candidate for seller exhaustion, not as automatic proof that a bear phase is over.

Weak holders may already have been shaken out before a final market low.

Volume as the first prerequisite

Overwhelming volume is treated as a first prerequisite, with climax-session turnover described as able to rival any single day of the prior advance.

Volume-price analysis compares a break or gap to session turnover to judge whether remaining forced selling may already have been spent.

Tools that grade a suspected climax

Listed confirmation tools for a potential climax include oscillator positive divergences, MACD-histogram extremes, and bullish reversal candlesticks such as hammers, engulfing patterns, morning stars, and piercing patterns.

A MACD histogram extreme is a deeply stretched MACD histogram reading used as a severity check on a decline and as a clue that any bounce may be a countertrend reaction rather than a finished reversal.

Price-indicator divergence is a setup in which price makes a weaker low while an oscillator fails to confirm, used as optional confirmation when gaming a washout.

September 2001 in the industrial average

In the September 2001 industrial-average case, four sessions of selling after the reopen preceded a fifth-session washout on September 21.

A 7,10 stochastic showed no positive divergence that day.

An individual-stock case with confirmation

One individual-stock case combined a gap of nearly four points on more than ten-times typical volume, an intraday drop below 27 that closed near 28, a short-term 7,10 stochastic positive divergence, and a downside MACD-histogram extreme.

Lifepoint Hospitals: mid-August selling climax holds

Bargain hunters would have seen a June top near 39, a failed July bounce, then a mid-August gap that opened near 29, tagged under 27, and closed near 28 on volume more than ten times normal. That climax-day low held on the late-October dip while the 50-day average flattened and price rebuilt toward 36. Weekly closes and the 50-day exponential average were traced from the Prophet daily pane; the 29 / under-27 / 28 climax candle is the article’s own description.
Bargain hunters would have seen a June top near 39, a failed July bounce, then a mid-August gap that opened near 29, tagged under 27, and closed near 28 on volume more than ten times normal. That climax-day low held on the late-October dip while the 50-day average flattened and price rebuilt toward 36. Weekly closes and the 50-day exponential average were traced from the Prophet daily pane; the 29 / under-27 / 28 climax candle is the article’s own description.Lifepoint Hospitals (LPNT) · Daily · 2004-06-01T00:00:00.000Z to 2004-12-31T00:00:00.000Z

Closes are approximate weekly readings from the daily candlestick pane, rounded to the nearest half dollar. The horizontal level is the climax-day low read off the long lower wick (article: declined to less than 27). Six-month daily Prophet chart with 10-day and 50-day exponential averages.

A contrasting case that failed

A contrasting stock case gapped lower on more than double average volume.

The suspected climax-day low was broken the next session, and a lower low printed within three days.

No positive divergence appeared, and the MACD-histogram trough was less extreme than an earlier July trough.

The climax-day low as the exit

Climax lows are described as usually being retested. The climax-day low is the session low of the suspected washout day, and a later break of that low is treated as a reason to abandon the immediate reversal hypothesis.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
38 of 80 in the MACD track
20061-5 pp.Next on MACDTreat a sideways Wave as permission before a breakoutA flat, sideways Wave is the cue to draw trendlines and support-resistance and to look for congestion or consolidation.
All readings on this track · 80 readings
  1. 1988Rebuild MACD-Mo and MACD-H before treating them as signals
  2. 1989Four-span MACD lookbacks as perishable parameters
  3. 1989Weekly then daily MACD confirmation on individual stocks
  4. 1991Regime-gated MACD and stochastic rules inside a checklist
  5. 1991Constructing MACD signal lines and divergence tests
  6. 1991MACD parameter order and cycle phase lag
  7. 1992Lengthened bond MACD as an equity regime filter
  8. 1992Long-horizon MACD construction from paired exponential averages
  9. 1993Constructing a signed ten-point trend filter
  10. 1994Constructing lag-reduced double exponential averages for MACD
  11. 1994Seeding DEMA2 filters to build a MACD signal
  12. 1994Constructing MACD from lag-reduced exponential averages
  13. 1994TEMA1 from nested exponential averages, then a two-horizon MACD
  14. 1994Constructing entry and exit on a relative-strength MACD
  15. 1994Constructing a relative-strength MACD crossover spreadsheet
  16. 1995Consensus presignal filters for Relative Strength Index, MACD and the Stochastic oscillator
  17. 1997Confirm the MACD turn with price, then exit on the histogram
  18. 1997Reconstructing a stochastic oscillator, MACD, and a triple-smoothed oscillator
  19. 1997Moving-average windows before crossovers and MACD
  20. 1999Second-stage MACD on relative-strength inputs
  21. 1999Constructing MACD from exponential-average spreads for crossover and divergence
  22. 1999Coding candlesticks into numeric indicators
  23. 2001Second-low confirmation with a percentage oscillator and money-flow filter
  24. 2001Constructing MACD from exponential average spreads and a signal line
  25. 2002Separate bounded and trend-following oscillator rules
  26. 2002Sort the regime before assigning MACD and stochastic jobs
  27. 2002Building classic divergence filters from RSI and MACD
  28. 2002Weekly highs and lows as trend gates
  29. 2002Constructing channel-normalized Fisher reversal signals
  30. 2002Affine-price and the Fisher transform as a constructed companion to MACD
  31. 2003Regularized EMA construction with a MACD line and a thrust oscillator
  32. 2003Curvature-penalized exponential averages versus MACD
  33. 2003MACD, moving averages, and a trend filter as one timing system
  34. 2003Fractional MACD and linear-regression reversal construction
  35. 2004Weekly MACD-histogram timing of bear-market rallies
  36. 2004Candlestick triggers filtered by MACD divergence
  37. 2004Staging energy-complex tops with trendline, breakout, and MACD
  38. 2005Selling climax holds versus fails
  39. 2006Treat a sideways Wave as permission before a breakout
  40. 2007MACD with a Stochastic oscillator for spotting trend reversals
  41. 2007Rebuilding an S&P 500 fifth-wave count after a broken target
  42. 2007Constructing MACD, RSI, and stochastic confirmation for futures
  43. 2007MACD histogram divergence needs a confirming close
  44. 2007Write the plan as a stack: ratio, boundary, then oscillators
  45. 2008MACD divergence and Stochastic oscillator confirmation on lumber futures
  46. 2008Assign confirmation, timing, and a stop before a currency pair is tested
  47. 2008Confirm the ten-bagger launch path before the MACD exit
  48. 2008Reading the offloaded evidence file
  49. 2008A Leader companion for MACD direction warnings
  50. 2008Relative strength exits with MACD averages and RSI
  51. 2008Assign one job per indicator in a three-screens rule set
  52. 2008Sequencing RSI, MACD, and average crossovers
  53. 2010Constructing the Schaff Trend Cycle from MACD and a dominant-cycle window
  54. 2010Schaff Trend Cycle as a MACD and Stochastic oscillator combination
  55. 2010Combining Relative Strength Index, the stochastic oscillator, and MACD as slope filters
  56. 2010Short-term wave and ratio clues without direction calls
  57. 2010A precise pullback entry and an unplanned profit-protection exit
  58. 2010Filtering MACD false signals with trendline breaks
  59. 2011Vendor feeds as an input variable in a MACD evaluation
  60. 2012Out-of-the-money versus in-the-money option sensitivity to implied volatility
  61. 2012MACD window tuning as hold-time control
  62. 2012Combining a moving-average crossover with MACD and support-resistance
  63. 2012Testing a published MACD entry with a histogram and signal-line agreement filter
  64. 2012Treat sample systems as a lab before live rules
  65. 2013Constructing moving averages and MACD from one price series
  66. 2013The next-bar price that forces a MACD signal-line cross
  67. 2013Constructing next-bar MACD reversal prices
  68. 2013Constructing inverted MACD reversal prices
  69. 2014Shared-filter combinations of the stochastic oscillator, MACD, and RSI
  70. 2014Square-root lookbacks for combined MACD and RSI
  71. 2015Audit open interest and trend before trusting oscillator crossovers
  72. 2016MACD without a signal line, confirmed by moving-average trend filters
  73. 2016Use RSI, MACD, and a moving average as a market-health consensus
  74. 2016MACD line versus histogram is a display problem first
  75. 2017Weekly and daily MACD on a single daily chart
  76. 2017Weekly and daily MACD as a stacked momentum filter
  77. 2017Nested weekly and daily MACD from paired EMA spreads
  78. 2018Weekly and daily PPO scale versus MACD, with bounded RSI and stochastic readings
  79. 2018Constructing a weekly and daily percentage price oscillator
  80. 2020Constructing Wyckoff tape reading with MACD, moving-average, and RSI filters
By fieldChart patterns222 readingsBy year2005104 readings
All 115 readings tagged MACD
Also on MACD5 readings
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