How to Identify the Loss of Strength in a Trading Movement 🧐📉
One of the most important aspects of trading is learning to detect when a movement is losing strength. If you can identify that key moment, you can protect your profits, avoid late entries, or even take advantage of a potential reversal in your favor. The market structure always leaves clues; you just have to learn to see them clearly 👀.
In this article, I will explain how to recognize the loss of strength in a movement, what signals to look for, and how to interpret price structure to make smarter and more strategic decisions.
🔎 What does the loss of strength in a movement mean?
A movement loses strength when the momentum supporting it starts to weaken. This happens because buyers or sellers (depending on the direction of the movement) start to lose interest or are closing positions. The price stops advancing with the same intensity and begins to show signs of fatigue.
This may be due to:
✅ Volume exhaustion
✅ Arrival at a key resistance or support zone
✅ Divergences in indicators like the RSI or the MACD
✅ False breakouts or rejections at important levels
🛠️ Signals to detect loss of strength in market structure
This is where market structure gives you clear clues about the loss of strength. These are some signals that will help you identify it:
1. Smaller candles with long wicks
When a movement loses strength, the price stops forming strong candles and begins to show smaller candles with upper or lower wicks. This indicates that there is indecision in the market and that buyers or sellers are no longer pushing the price with the same strength.
👉 Example: If you are in a bullish movement and start seeing candles with long upper wicks and small bodies, it is a sign that buyers are losing control and sellers are coming into play.
2. Divergences in the RSI or MACD
If the price is marking new highs or lows, but the RSI or the MACD are showing an opposite direction, it is a divergence. This indicates that the momentum behind the movement is losing strength and a reversal may occur soon.
👉 Example: If the price makes a new high, but the RSI is marking a lower high, it is a clear sign that the bullish momentum is weakening.
3. Failed breakout of a key level
If the price tries to break an important support or resistance but is quickly rejected, it is a clear sign that the market does not have enough strength to continue in that direction.
👉 Example: The price touches a resistance several times without being able to overcome it and starts to retrace with bearish candles. There you have a clear signal that the bullish strength is losing intensity.
4. Exhaustion patterns
There are patterns that indicate market exhaustion, such as:
Double top or double bottom
Head and shoulders
Triangles that end in false breakouts
Reversal candles like dojis or shooting stars
👉 Example: If a double top or a shooting star appears in a bullish trend, it is a sign that buyers are losing strength and sellers could take control.
5. Decreasing volume
If the price keeps advancing but the volume starts to decrease, it means there is less interest in continuing to push the price in that direction. A movement without volume is destined to lose strength and could end in a reversal or consolidation.
👉 Example: If the price is in an uptrend but volume is gradually decreasing, buyers are losing strength and it is likely that the price will turn around.
🚨 How to act when you detect loss of strength
When you identify that a movement is losing strength, you can apply several strategies:
✅ Partially or completely close your position to secure profits before a possible reversal.
✅ Adjust your stop loss to protect yourself from a retracement.
✅ Look for a reversal opportunity if the structure begins to change.
✅ Avoid new entries until the structure gives a clear signal again.
💡 Key advice:
Don't be carried away by emotion. The market often shows signs of exhaustion before a change, but the most common mistake is to ignore them for fear of "missing the movement." If you see that the structure is showing signs of weakness, trust the signals and act calmly and strategically.
🎯 Conclusion
Identifying the loss of strength in a movement is a key skill for any trader. Market structure, candle behavior, volume, and divergences in indicators are clues that allow you to anticipate a change. If you learn to read those signals and act with discipline, you can avoid unnecessary losses and improve your success rate.
The market always leaves clues... you just need to train your eye to see them 👁️🔥.
Thank you for reading, I hope you have a great day. Are you interested in learning more about trading, cryptocurrencies, or finance? Contact me; I would be happy to help you take your first steps or improve your knowledge. Let's grow your financial potential together!
And if you would like me to talk about a specific topic, let me know in the comments!
#LetsTalkAboutTrading
#FirstLearnThenInvest
#LetsTalkAboutCrypto
#CryptosAndBitcoin
Hugo S Centurión
519_7148_918