“Rapid Volume Contraction” Reversal Strategy (Volume Climax)

Logic Explanation: The end of a trend is often not because momentum has been exhausted, but because momentum “explodes.” When the price accelerates upward/downward and trading volume shows unprecedented huge volume, then the trading volume rapidly shrinks (extreme divergence between price and volume), it usually means the market is topping/bottoming out.

* Detailed Operations:

1. Identify the acceleration: The price slope becomes increasingly steep.

2. Observe the massive volume: A single candlestick appears with volume far exceeding the previous 20 K-lines.

3. Entry signal: After the massive volume, a small K-line with **shrinking volume** appears (a doji or an engulfing pattern).

4. Execution: Place a reverse order on the next K-line after the shrinking-volume is confirmed.

Case Analysis:

After a certain coin gets a boost from positive news, it surges 10% in 5 minutes, and the volume bars shoot up into the sky.

* Result: Immediately afterward, a very small shrinking-volume bearish candle appears, indicating that all the buying has already been consumed. Opening a short position at this point often allows you to catch a precise “waterfall” pullback.
$ETH