What is typically marked by high volume and a sharp reversal in price?

A climax is typically marked by high volume and a sharp reversal in price, often indicating a dramatic shift in market sentiment. This phenomenon usually occurs at the end of a major price move, where buying or selling pressure reaches an extreme level. When the volume surges significantly during such a reversal, it signals that market participants are expending their enthusiasm for the current trend, leading to a change in direction.

In a climax, the high volume accompanies an abrupt price movement, providing strong evidence that a majority of traders are willing to enter the market in significant numbers, potentially leading to a new trend. This sharp reversal can be contrasted with other options, which may not always involve the same intensity or the significance of volume associated with the change in price direction. The understanding of climax patterns is vital for traders as it allows them to identify potential turning points in the market.