Confluences
Sequential Exhaustion Confluences
Sequential Exhaustion is a powerful standalone tool, but its accuracy increases exponentially when combined with other technical pillars. Below are the most effective confluences to use with this indicator.
Support & Resistance (SR)
The most powerful signals occur when Sequential Exhaustion reaches an extreme (0.7 or 0.3) at the same time price reaches a major historical SR level.
The Setup: Price hits a monthly resistance level while the oscillator shows a Bearish Divergence (Solid Line) and the Momentum Radar is at maximum intensity.
Supply & Demand Zones
Look for exhaustion signals that occur within high-timeframe supply or demand zones.
The Setup: A "long wick" candle into a demand zone accompanied by an Oversold (0.3) reading on the oscillator is a high-probability "Spring" or "Liquidity Grab" setup.
Trendline Breaks
Use the oscillator to predict if a trendline will hold or break.
Trend Continuation: If price approaches a trendline and the oscillator is in the Neutral Zone (near 0.5), the trendline is likely to hold.
Trend Break: If price approaches a trendline but the oscillator is showing a significant Divergence, the trendline is likely to be breached.
Candlestick Confirmation
Always use price action as your final trigger.
Bullish Confirmation: Morning Star, Bullish Engulfing, or Hammer patterns at the 0.3 level.
Bearish Confirmation: Evening Star, Bearish Engulfing, or Shooting Star patterns at the 0.7 level.
Avoid "Catching Falling Knives": Never enter a trade solely because the oscillator is oversold. Always wait for a confluence (like a level hold or a candle pattern) and a cross back above 0.3.
Confluence Checklist
Volume
Look for volume spikes during exhaustion.
Market Structure
Ensure a break of structure (BOS) follows the exhaustion.
Higher Timeframe
Check if the HTF trend aligns with your reversal.
Moving Averages
Use the 200 EMA to determine the "Big Picture" trend.
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