Spikes Pattern
A Spike is a sudden, sharp move that can catch traders off guard. Price shoots up or down in a single swift candle, sometimes leaving a long wick if it snaps back quickly. These moves often happen around news releases or key levels, revealing a burst of volatility.
How to Identify
Dramatic Candle. Look for an unusually tall candle relative to recent price bars.
Quick Reversal. Price might reverse in the same candle or the next one, leaving a long wick.
Increased Volatility. Spreads widen, and volume can surge as buyers or sellers scramble.
How to Use
Entry. You can wait for confirmation. If price spikes and then closes back within the prior range, some traders treat it as a fade opportunity.
Stop. Keep stops tight in case volatility continues. If you’re going against the spike, consider placing stops just beyond the spike’s wick.
Target. Aim for levels where price consolidated before or watch momentum indicators to see if the move has legs.
Pro Tips
Check major news events that can cause sudden price jolts.
Be wary of slippage or large spreads if you trade right after a spike.
Always have a backup plan — spikes can reverse in seconds or continue even harder.
Exercise
Pick a handful of high-volatility moments in past data. Mark the candles that look like spikes. Note how price behaved in the following few bars. Would you have gone with the spike or faded it? Place hypothetical trades with stops just above or below the spike, then move forward on the chart to see if your target would have been reached. Record your observations to spot patterns in the aftermath of these sudden moves.
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