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Shock Dissipation Phase

(1-Minute Microstructure: Confirmation That the Local Bottom Is In)​

Length: 1-3 minutes (depending on how much confirmation you want)

Shock Dissipation is the precise moment where a forced-selling cascade ends and the local bottom forms on the 1-minute chart. This phase does not predict a higher-timeframe reversal — it predicts a microstructure retracement upward, usually to the Bollinger Bands midline.

This retracement is not discretionary or trend-based. It is a mechanical normalization that occurs once panic-driven momentum is exhausted.

Shock Dissipation is identified by a synchronized flip in three independent subsystems:

  • Volatility (ATR slope deceleration)
  • Momentum (MACD plateau + gentle color change)
  • Pressure (RSI direction change from extreme undershoot)

When these three turn together within 1–3 candles, the bottom is in.

What it looks like

The Cluster Principle

(Why These Must Be Seen Together)​

Individually, each subsystem can produce false signals. Together, they define a state transition in the market:

SubsystemIndicatorWhat It Confirms
VolatilityATR slope ↓End of range expansion
MomentumMACD plateau / slight V-shapeEnd of impulse expansion
PressureRSI slope ↑ (in opposite dir)End of panic pressure

When all three flip state within the same 1–3 candles, the Shock Dissipation Phase has begun.

This cluster represents the earliest possible confirmation that the market has moved from:

forced → voluntary distorted → organic chaotic → interpretable

This is the moment where trades become statistically valid again.

1. Volatility Regime Flip — ATR Slope Deceleration

ATR often continues rising after the bottom is in — but the slope of ATR begins declining.

This is the single strongest early signal that the shockwave has spent its energy.

What ATR slope deceleration means on the 1-minute:​

  • Forced selling has ended
  • Volatility expansion is no longer accelerating
  • Current candle ranges are shrinking
  • The shockwave is dissipating
  • Local bottom is in

ATR’s absolute value lags. ATR slope leads.

This is the real volatility confirmation that the cascade cannot continue without new sellers.

2. Momentum Regime Flip — MACD Histogram Plateau & Gentle Reversal

MACD bottoms as a broad, shallow, plateau-like region — a “reverse mesa” — followed by the first lighter-colored bar.​

This is the real momentum signature of forced-liquidation exhaustion.

Key characteristics:​

  • Histogram stops becoming more negative
  • Absolute bar size flattens out
  • A long, low plateau forms (flat momentum floor)
  • The first lighter-colored histogram bar appears
  • A slight upward tilt begins — often barely visible

Interpretation:​

  • Downward impulse is completely spent
  • Acceleration of selling = zero
  • Buyers don’t need to be strong — sellers are simply gone
  • The system is transitioning from impulse → drift
  • Momentum cannot support continuation of the cascade

The color change is the real signal.

Not the shape.

3. Pressure Regime Flip — RSI Reversal From Extreme Undershoot

RSI hits an abnormal extreme (10–20 range) and then reverses slope sharply upward.

This is not “oversold reversal.” This is pressure reversal.

Interpretation:​

  • Panic pressure has stopped increasing
  • Involuntary exits are no longer dominating
  • Liquidity is returning
  • Organic bids finally have effect
  • Local bottom is confirmed

RSI slope is more important than RSI level.

Shock Dissipation = Local Bottom (1-Minute Only)

When all three subsystems flip within 1–3 candles:

✔ The local bottom is in​

The shock move is structurally complete.

✔ A retracement upward is highly likely​

Target: Bollinger Bands midline (occasionally VWAP if momentum is strong enough)

✔ Microstructure normalizes​

Price stops being governed by panic flows.

✔ Indicators regain meaning​

RSI, MACD, BBs all begin working again.

✔ System becomes tradable again​

This is the earliest entry point after a cascade.

❗ Scope Limitation (Explicit and Non-Negotiable)

This Shock Dissipation model applies only to the 1-minute chart.

It does not imply a bottom in:

  • 5-minute
  • 15-minute
  • hourly
  • 4H or daily

Higher timeframes may continue trending downward even after this retracement.

This model predicts:

The immediate microstructure rebound after a forced unwind — nothing more.

This limitation is restated in the summary article as well.