Climactic Reversals

Question 1

A broader definition is more useful to traders: any type of unsustainable
behavior should be considered to be a type of climax, whether or not a
reversal follows.

Answer 1

A climactic reversal is a climax that is soon

followed by a sharp move in the opposite direction, and all are failed breakouts of something.

Question 2

When does a climax end?

Answer 2

A climax ends as soon as there is any interruption of the strong trending behavior,
such as the formation of a pause bar or a reversal bar

Question 3

Define: Crowded Trade

Answer 3

When a market is moving climactically, fundamental traders
often refer to the market as being a crowded trade, meaning that they believe that
too many people already have a position, so there might not be many traders left to
keep pushing the market further in the trend