Exhaustion

AAA

DEFINITION of 'Exhaustion'

Situation in which a majority of participants trading in the same asset are either long or short, leaving few investors to take the other side of the transaction when participants wish to close their positions. Exhaustion signals the reversal of the current trend because it illustrates excess levels of supply or demand.

INVESTOPEDIA EXPLAINS 'Exhaustion'

Traders can identify periods of exhaustion by looking at the Commitments of Traders Report. This report is published every week and shows levels of open interest in the futures markets. An excessively high number of long contracts could indicate that everybody who wishes to be long has already taken a position, leaving few investors to buy these assets back at a higher price.

RELATED TERMS
  1. Open Interest

    1. The total number of options and/or futures contracts that ...
  2. Short (or Short Position)

    1. The sale of a borrowed security, commodity or currency with ...
  3. Commitments of Traders Report - ...

    A report published every Friday by the Commodity Futures Trading ...
  4. Disparity Index

    A technical indicator that measures the relative position of ...
  5. Demarker Indicator

    An indicator used in technical analysis that compares the most ...
  6. Futures Market

    An auction market in which participants buy and sell commodity/future ...
Related Articles
  1. The Seven-Day Extension Fade
    Forex Education

    The Seven-Day Extension Fade

  2. Using Open Interest To Find Bull/Bear ...
    Options & Futures

    Using Open Interest To Find Bull/Bear ...

  3. Intro To Open Interest In The Futures ...
    Options & Futures

    Intro To Open Interest In The Futures ...

  4. Forex: The Moving Average MACD Combo
    Forex Education

    Forex: The Moving Average MACD Combo

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center