A momentum indicator that identifies potential trend exhaustion by comparing current candle body size to recent average candle bodies, signaling possible market reversals.
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The Candle Momentum Exhaustion indicator calculates the average candle body size over a specified period, typically 14 bars. It then identifies candles that significantly exceed this average size, marking them as potential exhaustion signals.
When a candle's body is larger than the average by a set multiplier (default 2.0), it is flagged as an exhaustion candidate. Bullish exhaustion occurs with large positive candles, while bearish exhaustion happens with large negative candles, each marked with distinctive triangular indicators.
Why it may be useful
This indicator helps traders identify potential turning points in market trends by highlighting moments when momentum may be overextended. By recognizing when price movements become unusually large, traders can anticipate possible trend reversals or consolidation periods.
The signal provides a visual and quantitative method to assess market psychology, showing when buying or selling pressure might be reaching its limit. This can help traders make more informed decisions about potential entry or exit points in their trading strategies.
When to explore it
The Candle Momentum Exhaustion indicator is most effective in trending markets with clear directional movements. It works particularly well in identifying potential reversal points after strong bullish or bearish price action, helping traders spot moments of potential market fatigue.
Traders should use this indicator in conjunction with other technical analysis tools to confirm signals. It is especially useful in volatile markets or during periods of significant price movement, providing additional insight into potential trend changes and market sentiment.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
