Exhaustion
Situation in which a majority of participants trading in the same asset are either long or short, leaving few investors to take the other side of the transaction when participants wish to close their positions. Exhaustion signals the reversal of the current trend because it illustrates excess levels of supply or demand.
Investopedia Commentary
Traders can identify periods of exhaustion by looking at the Commitments of Traders Report. This report is published every week and shows levels of open interest in the futures markets. An excessively high number of long contracts could indicate that everybody who wishes to be long has already taken a position, leaving few investors to buy these assets back at a higher price.
Related Links
Market Reversals And How To Spot Them
Using COT Report To Forecast FX Movements
Discovering Open Interest - Part 1
Discovering Open Interest - Part 2
See also: Commitments of Traders Report - COT, Demand, Futures Market, Long, Open Interest, Reversal, Short, Supply
exhaustion ex·haus·tion (ĭg-zôs'chən)
n.
The inability to respond to stimuli; extreme fatigue.
The act or an instance of using up a supply of something.
The extraction of the active constituents of a drug by treating with water, alcohol, or another solvent.