Climax

AAA

DEFINITION of 'Climax'

A market condition that is characterized by very high trading volume and a dramatic downward or upward movement in price. High volume and downward price movement indicate a selling climax, while high volume and upward price movement indicate a buying climax. Either type of climax signals the end of a trend.

INVESTOPEDIA EXPLAINS 'Climax'

Selling into a climax run can be a good exit strategy, because by selling during a period of euphoria, investors can lock in dramatic gains. A buying climax can bid a stock's price up to levels it will never reach again, or that it will not reach again for at least a decade. At the end of a buying climax, prices can fall sharply as investors realize the stock has been overbought.

RELATED TERMS
  1. Outside Reversal

    A price chart pattern in which a security's high and low prices ...
  2. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of ...
  3. Reversal

    A change in the direction of a price trend. On a price chart, ...
  4. Support (Support Level)

    The price level which, historically, a stock has had difficulty ...
  5. Bottom

    The lowest point or price reached by a financial security, commodity, ...
  6. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
Related Articles
  1. Active Trading Fundamentals

    Support And Resistance Basics

    Understanding the concept of Support and Resistance in trading can drastically improve your short-term investing strategy.
  2. Active Trading Fundamentals

    The Psychology Of Support And Resistance Zones

    Emotion drives the market more than you might realize. Find out how psychology affects support and resistance zones.
  3. Technical Indicators

    Interpreting Support And Resistance Zones

    Use of support and resistance zones can be a key to successful trades. Learn how they work and how to use them.
  4. Technical Indicators

    Why is the 200 Simple Moving Average (SMA) so common for traders and analysts?

    Learn about the 200 simple moving average (SMA), how it is utilized by traders and analysts, and why it is considered to represent major support or resistance.
  5. Trading Strategies

    How do I build a profitable strategy when spotting a Three White Soldiers pattern?

    Learn a simple trading strategy implemented based on the bullish market reversal signal given by the three white soldiers candlestick pattern.
  6. Trading Strategies

    How are Three Black Crows patterns interpreted by analysts and traders?

    Understand the basics of the three black crows pattern and how analysts and traders interpret this bearish reversal pattern when creating a trading strategy.
  7. Trading Strategies

    How effective is creating trade entries after spotting a Symmetrical Triangle pattern?

    Understand the symmetrical triangle pattern and the likely success of the most common breakout trading strategy implemented when the pattern is identified.
  8. Forex Strategies

    How do I implement a forex strategy when spotting a Rounding Bottom Pattern?

    Understand the key factors to implementing a profitable forex trading strategy based on recognizing the formation of a rounding bottom pattern.
  9. Trading Strategies

    How are Stick Sandwich patterns interpreted by analysts and traders?

    Understand the basics of the stick sandwich candlestick pattern and how this reversal signal is interpreted by analysts and traders.
  10. Trading Strategies

    How effective is creating trade entries after spotting a Three Black Crows pattern?

    Understand the basics of the three black crows candlestick pattern and how this reversal signal is used for the creation of effective trade strategy.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center