One indicator that can help traders identify areas of potential opportunity for a reversal or continuation in price is exhaustion. The idea of exhaustion is that one side has become too aggressive with their participation and is now at risk of seeing price reverse against them.
The Traderade Exhaustion Indicator helps to identify these near-term areas of potential reversals. It displays them within Bookmap on the Traderade+ Discord educational streams for ES and NQ futures during regular trading hours. The number of circles stacked vertically on top of each other gives you an idea of the scale of exhaustion (or lopsided aggression) that is being shown.
Today's high confidence seller exhaustion indicator fired on ES off just over the lows and we saw a 30+ handle rally from there before a medium confidence buyer exhaustion printed.
We can see that seller exhaustion indicator on the lower left of the chart, where we saw a cluster of selling leading up to it and then an impulse move lower that caused an exhaustion print. Then on the move higher we saw two more seller exhaustion prints on an attempt to push lower that was well-absorbed by buyers.
It was not until we reached a significant ceiling of offers above that we saw exhaustive buying into a VWAP rejection and a potential opportunity to de-risk out of the core position and keep runners on if desired.
This is an example of how this indicator can be useful, particularly when more extreme readings print. Because they can lead to reversals where the other side takes control of price action.
The key is being aware that exhaustion is not instantly validated. It can take up to ten minutes for it to play out and a reversal to occur. In the case of today it was about four minutes from print to confirmed reversal. An exhaustion print also does not guarantee a reversal (or continuation) it just makes it more likely, which is why confirmation is key!
That means I want to wait for the price action to agree that there is a reversal. So when I saw that very large green delta buy print that was a confirmation signal that buyers are taking control and a reversal is underway.
This exhaustion indicator is exclusively available to Traderade+ members on our daily educational Bookmap streams. It will display both a graphical alert and there will be a voice alert in the stream. That means you need to be on our Discord and connected to the stream during trading hours to see or hear the signal.
This feature adds to the Advanced SPX Options Visualizer and several other unique and proprietary tools I've created. With many, many more to come!