Selling climax
A selling climax is the bar where the last sellers give up. The shape: the widest down spread of the decline, ultra high volume, often a gap down open, and a close somewhere off the low, sometimes in the middle, sometimes higher.
Bar 5 in the drawing is the climax. Read it with the three questions. Spread: widest in the sequence. Volume: the largest by far. Close: not on the low. Sellers threw everything at the market and the bar did not close where they wanted it. Whoever bought that volume was not a retail trader; nobody at home has that much to spend in one bar.
What a climax does not tell you is that the low is in. It tells you the decline met absorption. The confirmation is what the next bars do, which brings us to the second shape.
Stopping volume
Stopping volume is often the bar right after the climax, and sometimes it is the climax itself when the close is high enough. The shape: a down bar, or a bar that opened lower, on very high volume, with a close near its high. Bar 6 above is a clean example. Price opened below the climax close, volume was again enormous, and the bar closed near the top of its range.
This is bar D from part 2 in its natural habitat. Effort down, result up. The down move was stopped, hence the name. From here VSA expects a rally, then a test of the area, and part 5 is about that test.
Shakeout
A shakeout is a selling climax that happens through a level everyone can see. Price breaks support on a wide bar with heavy volume, takes every stop resting under it, and closes back up. The next bar confirms by closing above the broken level.
Bar 5 breaks 4,144 with the largest volume in the sequence and closes back near the level. Bar 6 recovers it. Readers of the liquidity sweep article will recognise the shape from the structure side; VSA adds the confirmation that the break came with heavy participation and no result. A break on light volume that closes on its low is not a shakeout. It is a break.
Bag holding
A quieter cousin. Bag holding is a down bar with a narrow spread on very high volume, closing on its high, usually near the end of a decline. The market was handed a bag of supply and held it without price going anywhere. It is subtle on gold because tick volume smooths it, but on H1 it does appear, most often in the last dip of an accumulation range.
What strength needs before it becomes a trade
None of these events is an entry. A climax says sellers were met; it does not say demand will now push price up. Between the event and the trade sits the test, which is the subject of the next part. The order is always: background, event, test, confirmation. Traders who buy the climax bar itself are usually early by a few bars, and the mistakes chapter draws exactly how that goes wrong.
Course navigation. Previous: Part 3, Background and context. Course index: VSA course for gold. Next: Part 5, Tests and no supply.
FAQ
How do I tell a selling climax from ordinary heavy selling?
The close. Ordinary heavy selling closes on or near the low. A climax closes off the low, and the following bar tends to close even higher. Also the position: a climax comes after an extended decline, on the widest spread of that decline, not in the middle of it.
Does stopping volume always follow a climax?
No. Sometimes the climax bar itself closes high enough to be both. Sometimes the stop happens over three or four bars of heavy volume with no single decisive close. What matters is that heavy volume down bars stopped producing lower closes.
Is a shakeout the same as a stop hunt?
Same event, two vocabularies. The structure vocabulary calls it a sweep or stop hunt and reads the wick. VSA calls it a shakeout and reads the volume and close. Both must agree for it to count: heavy volume through the level and a close back inside.
Can strength appear during an uptrend?
Yes, on the dips. A small down bar on low volume inside a markup is the no supply bar from part 5, and it is the everyday form of strength. The dramatic climax shapes belong to the end of declines.
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