Forex - Price Action - Detecting when a trend is over-extended

* Look for a climax or exhaustion reversal bar. * These exhaustion and climax bars tend to represent a high probability reversal coming based on the various participants and how they tend to trade trends.

The key things to be looking for in spotting these exhaustion and climax reversal bars are;

  1. a bar that is much larger than the previous price action and ideally the largest bar in the move
  2. it occurs at/near a key support or resistance level, or after breaking a key support/resistance level
  3. it occurs after several bars have been trending in an impulsive fashion in one direction

NOTE: Although there are other many subtle clues you can look for to amplify the possibility of these climax and exhaustion reversal bars, these are the three main ones you want to see in the price action to look for a trading opportunity.