News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
More View more
Real Time News
  • (Weekly Fundamental) Australian Dollar Outlook: Tied to Biden Stimulus Bets, S&P 500, US Dollar, Treasuries $AUDUSD #SP500 #stimulusbill #USD https://www.dailyfx.com/forex/fundamental/forecast/weekly/aud/2021/01/16/Australian-Dollar-Outlook-Tied-to-Biden-Stimulus-Bets-SP-500-US-Dollar-Treasuries.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/H7aus0Aljt
  • The inside bar pattern occurs regularly within financial markets. Incorporating the inside bar strategy can enhance a trader's market analysis. Find out how more here: https://t.co/E3EWOYTYNw https://t.co/7zI3p6UNVs
  • Bank of Japan to mull widening of its long-term yield band -BBG $USDJPY
  • While the rise in longer-dated Treasury yields have been impressive as of late, March highs remain a key focus for resistance The medium-term uptrend remains intact, maintained by rising support from August Fading fiscal stimulus expectations (size) may sour yields ahead https://t.co/L3vBcF0ts7
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqhRoMG https://t.co/vFJ8zmphMm
  • While the US Dollar has been holding its ground, its downside bias against the Singapore Dollar, New Taiwan Dollar Thai Baht and Indonesian Rupiah remains intact as it hovers at support. Get your market update from @ddubrovskyFX here: https://t.co/p7gAztWuVG https://t.co/zB1pOS6U4D
  • The $VIX is now running 227 trading days above the 20 handle. It is also working its way quickly into a dead-end descending triangle. These don't really break lower... https://t.co/39Pr7YrQ08
  • WTI Crude amongst the many market participants taking a hit today, down almost 3% $WTI $USD https://t.co/eg2phm1wUO
  • The power of suggestion: even though the market recognized the mistake with mixing Tesla founder Musk's suggestion to use the Signal app with the stock SIGL, it is still trading >2,000% above pre-remark levels and maintains heavy volume. Us speculators are an interesting people
  • Forex Update: As of 21:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: -0.07% 🇨🇭CHF: -0.35% 🇪🇺EUR: -0.65% 🇨🇦CAD: -0.75% 🇦🇺AUD: -0.95% 🇳🇿NZD: -1.19% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/6NZVebT00L
Trading Double-Spikes (Price Action)

Trading Double-Spikes (Price Action)

2012-04-26 22:34:00
James Stanley, Strategist

One of the greatest parts about trading price action is that traders can see sentiment playing out on the chart with one of the most pure indicators available: Price.

Double-bottoms and double-tops can be appealing setups for traders as the market has shown a willingness to react to a specific price. The picture below will show an example of a double bottom. Notice that after an elongated down-trend the currency pair bounces from the same price on two separate occasions.

Trading Double-Spikes (Price Action)

This clues the trader in to the fact that something is going on at this price. Unfortunately it won’t tell us what exactly, and whether or not we should buy or sell – but it does tell us that this is an important price in the currency pair.

The reasons for the bounce could be endless. Perhaps there is a large corporation looking to exchange currency setting a line in the sand with which they want to buy. Or perhaps this price is a strong level of support (much like Parity on USDCAD or AUDUSD).

Whatever the reason may be, we can use the information that we do know to strategize a manner of entry into the trade; but first we have to decide which direction we want to make a play.

Double Spike Breakout

The Double Spike Breakout looks to play a continuation move in the currency pair, expecting the support (or resistance) that has reversed price in the past to become broken on another attempt. The picture below will illustrate in more detail:

Trading Double-Spikes (Price Action)

With the Double-Spike Breakout, it’s important to remember that, like any breakout, price can easily reverse against us and move for an extended amount of time.

Given that price has bounced twice in the past, it is perfectly reasonable to expect that price may break support enough to enter our position, and then reverse against us. So prudent rules of money management when trading breakouts apply; and risk-reward ratios may be more favorable at 2:1 or greater (looking for 2 dollars of profit (or more) for every 1 dollar risked).

Double-Spike Fade

The Double-Spike Fade is the opposite of the earlier strategy in the fact that it looks for a reversal after seeing the second bounce off of support (or resistance). However, since the trader doesn’t have the luxury of substantiated support and/or resistance – a different modal of entry is necessary.

The chart below will show a bearish market buckling off of support offering a dual-spike with which the trader can look to fade:

Trading Double-Spikes (Price Action)

Once resistance is broken, the trader can look to open the position. In this example, since we were looking to ‘fade’ the move that created the double-spike (and since the move was bearish leading price to support) the trader would be looking to buy this currency pair. The picture below will illustrate further:

Trading Double-Spikes (Price Action)

Previous: Attacking News Events with Price Action

--- Written by James B. Stanley

To contact James Stanley, please email Instructor@DailyFX.Com. You can follow James on Twitter @JStanleyFX.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES