{"id":5465,"date":"2020-08-28T14:44:31","date_gmt":"2020-08-28T11:44:31","guid":{"rendered":"https:\/\/roboforex.com/blog\/?p=5465"},"modified":"2026-05-26T10:57:28","modified_gmt":"2026-05-26T07:57:28","slug":"candlestick-patterns-meet-spike","status":"publish","type":"post","link":"https:\/\/roboforex.com/blog\/blog\/2020\/08\/28\/candlestick-patterns-meet-spike\/","title":{"rendered":"Spike Pattern: Candlestick Model on Forex"},"content":{"rendered":"\n

Today, we will get acquainted with the Spike pattern<\/strong>. It is rather rare on charts but provides decent trading opportunities. It has been around for quite long but the one who noticed it first was Jack D. Schwager: he described the pattern<\/a> and designed the trading rules.<\/p>\n\n\n\n

This candlestick pattern<\/a> may form both at the end of a bullish and bearish trends. The point is that it forms after a might up- or downward impulse when the price returns to the initial values upon its ending. If you look at the pattern closer, you will see the following.<\/p>\n\n\n\n

<\/span>A Spike forming at the top of an uptrend<\/span><\/h2>\n\n\n\n

A certain event (some news on the economic calendar<\/a> or a force majeure, mostly overvalued economically) makes the quotations sky-rocket.<\/p>\n\n\n\n

After a precipitated impulse, the quotations stop at the high where a reversal candlestick<\/a> may form (a Harami, Pin Bar<\/a>, Shooting Star, and the like). Then on the next candlestick, the quotations return to their initial values which they started growing from. And then the existing trend normally reverses<\/a>, and the price starts moving in the opposite direction.<\/p>\n\n\n\n

\"Spike<\/a>
Spike pattern <\/figcaption><\/figure>\n\n\n\n

<\/span>A Spike forming at the bottom of a downtrend<\/span><\/h2>\n\n\n\n

As described above, under the influence of some news or events, the quotations drop steeply. At the low, a reversal candlestick pattern may form (a Hammer, Harami, Inverted Hammer<\/a>, and the like). Then on the next candlestick, the price returns to the place where it started falling from. And then the actual trend reverses, and the quotations start growing.<\/p>\n\n\n\n

\"Spike<\/a>
Spike pattern <\/figcaption><\/figure>\n\n\n\n
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<\/span>Why does a Spike appear?<\/span><\/h2>\n\n\n\n

As a rule, the appearance of a Spike is provoked by a human factor: greed, fear, and panic. Greed makes traders open trades after the beginning of the impulse, however, it might not be enough for the growth to continue. Then, after the decline begins, panic and a fear of losing money<\/a> comes to the scene. The traders start closing orders massively, and after the price returns to the starting point, it goes on falling or growing.<\/p>\n\n\n\n

The other situation when a Spike may form is when there appears a trader with an extremely large position volume. In this case, if you look at the market depth, large volumes are bought at all the existing prices, then the depth fills up with applications, and the quotations return to the initial levels.<\/p>\n\n\n\n

<\/span>Additional reasons for a Spike to formation<\/span><\/h2>\n\n\n\n