Futures Exhaustion describes a market condition in futures trading where the momentum of either long or short positions significantly diminishes, suggesting a potential reversal in the prevailing price trend. This state occurs when the dominant market participants have largely completed their buying or selling activities, leaving fewer new participants to sustain the current direction. It often precedes a period of consolidation or a change in price trajectory. It indicates a waning of directional conviction.
Context
The concept of futures exhaustion is a key analytical point for traders seeking to anticipate market shifts, particularly in volatile cryptocurrency futures markets. Identifying this condition requires careful observation of open interest, trading volume, and funding rates. Debates often center on the precise indicators and timing necessary to confirm true exhaustion versus a temporary pause in market activity.
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