[Practical Explanation Part 3] Sell-off Exhaustion / Buy-up Exhaustion Reversal Signal v1.0 — Nikkei 225 30-minute chart aiming for “pullback recovery → full extension TP”

Today's Conclusion (TL;DR)

• Two Buy Patterns Occurred (morning and afternoon). Both followed the textbook sequence of Rev↑ → EMA convergence → TP reached.

• On a pullback,Exh↑ (exhaustion of selling pressure) triggered, riding the midline (EMA band) to continue with the trend.

• In a strong continuation phase, Exh↓ (excessive selling) signals light up. Partial profit-taking → break-even stop is effective.

Only these 3 tools are used

1. Rev (Reversal)… signs of reversal.
   -Rev↑: Upward reversal signal
   -Rev↓: Downward reversal signal

2. Exh (Exhaustion)… warning of exhaustion or overextension.
   -Exh↑: Selling pressure exhausted (likely to move up)

   - Exh↓: Buying overextension (sign of a pause in rise)

3. Midline (EMA band)… Trend determination and “store of strength.”
   - If the candlestick is above the midline → up bias, below → down bias
   -Touching the line → rebound indicates an pullback candidate

Rules are simple:
“Direction with Rev” → “Confirm pressure relief with Exh” → “Enter with midline in tow”

Chart flow (30-minute chart, UTC+9)

*Explanations follow the attached chart labels (BUY/TP/Rev/Exh displayed)

① Late morning to just before noon:First BUY → TP

• From the early morning pullbackRev↑ lights up.

• Exh↑ also coincides, confirming exhaustion of selling pressure.

• Candle breaks above the midline (EMA) → pullback forms at the same line.

• System BUY lights up, TP line (horizontal) at the nearest swing high is placed.

• Subsequently, it straightforwardly reaches TP (light blue label “TP”).

  • This is the shortest path of “Rev → midline → TP”.

  • A situation where one aims for a confident single shot rather than chasing more growth.

    
    

② Early afternoon to early evening:Pullback reformation → Second BUY

• During the ascent, Exh↓ lights up once, signaling a mild pullback.Return to the midline

• with multiple lower wicks →Rev↑ re-lights.

• Two conditions align (midline above / Rev↑) → BUY lights up.

• Trend recovers again toward afternoon → TP reached.

  • Pullbacks are taken around the midline.

  • Once surpassing the previous TP high zone, it tends to accelerate upward.

    
    

③ End phase:Exh↓ fireworks → partial profit-taking & break-even stop

• In the phase of chasing highs, multiple Exh↓ signals (overbought) appear.

• Profit-taking in parts (TP1/TP2) or move to break-even is a sensible shift.

• If Rev↓ appears, avoid new longs and wait for a pullback.

  
  

Where today could be reproduced (setup steps)

1. Market tone check: Midline angle is rising, candles stay above ⇒ bullish bias

2. Signal A (direction): Rev↑ lights up

3. Signal B (pressure relief): Exh↑ lights up or recently lit

4. Backbone line: wait for pullback to midline / be light on Friday or before events

5. Entry:

   • Near the midline rebound or a break of the recent high with a stop

6. Profit-taking / retreat：

   • TP1: recent high to just before system TP line

   • TP2: post-breakout extension (shrinks with Exh↓ lighting)

   • Stop loss: clearly break the midline with a close＋Rev↓: exit together

   • Move to break-even: after TP1 is achieved, shift stop to break-even

     
     

Three conditions to raise the quality of entries

• ① Advantage of simultaneous signals:Rev↑ + Exh↑ being near-simultaneous improves win rate

• ② Angle of the midline: enter when it is rising rather than flat

• ③ Recent volume spike: volume accompanying pullback rebound increases reliability

  
  

If the outcome is not favorable (alternative scenario)

• Midline break + Rev↓: shift perspective. Do not buy down easily

• Exh↓ firing repeatedly: prioritize profit-taking, skip new entries

• Range breakout: shrink TP width, switch to higher turnover instead of chasing

  
  

Summary

• Today“Direction by Rev, back by Exh, and coordinates by the midline” clearly functioned as the v1.0 baseline.

• Two trades in morning and afternoon, both reached TP, partial profit-taking → break-even routine fit neatly.

• Simply put, the “signs of reversal” are visible, reducing discretionary hesitation.

Usage notes (FAQ)

• What time frame?: For day trading, use 5m, 15m, 30m; for swing, 4-hour is also effective.

• Counter-trend or trend-following?: Capture the reversal signal and ride with the trend as the core idea.

• Using with other indicators?: Works well with VWAP and volatility indicators (ATR). No need for excessive filtering.

Disclaimer

This article is not trading advice but a practical learning guide. Please make investment decisions at your own risk.

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