nostradamus says , page-7

denys

There are several aspects to a capitulation I suppose.

It is a panic just like a crash.

The bull market capitulation is when those shorting, experience such severe financial and psychological pain that they exit ALL their shorts that have cost them dearly and give up on their analysis and even go long.

They are joined by those who are bullish but have been waiting for a pullback to buy, who now see the market accelerating higher, and must now just buy or forever be left behind.

So an already big upside bar gets bigger and volume gets huge.

Now there are no buyers left as all have entered who will enter.

When the market starts to then dip a little, it becomes obvious there is no support left.

So the market quickly drops some and you are left with a inverted hammer formation, which is a big bar with the open and close at the lower end.

There is more downside to come and it can be swift or wait till some distribution comes as the "smart" money then tries to hold the market steady as it works through its short purchases before releasing the market to complete its destined correction.

The inverse of all that applies to a capitulation in a bear market.