A situation in which a security's price has risen very quickly and very high on heavy trading volume. A buying climax is often followed by steep price correction.
The Buying Climax takes place at the market highs.
A buying climax occurs at a time when there is positivity across the board.
Companies are posting good results, newspapers are flashing so-called ‘experts’ as saying that the bull market has a long way to go and fund managers are getting huge bonuses for their ‘strong performances’.
- Price should be in an up-trend.
- The last up-trend bar should be on extremely high (ultra high) volume - this tells us that the up-trend was fueled by the strong Bulls and the "Smart Money had to put a lot of selling pressure to overcome these strong Bulls.
- Ideally, the last up-trend bar should be a narrow bar at new highs, yet, it could belong bar with the close below the middle of the bar (long upper shadow if candlesticks are used).
- This tells us that the strong selling pressure of the Smart Money beat the Strong Bulls and they yielded to it.