Forex trading with the Double Spike Technique
Forex traders need instructions to observe, analyze and predict market direction. Traders must also have the knowledge to see market sentiment. There are various instructions used by traders. But of all that, the most appropriate clue is price. Because there isn’t one clue that can match prices, so we will review the trend changes from price action.
If you pay attention to the price pattern, there are two price action patterns called double bottom and double top. Both can be used as references to predict future trends. After mobility, prices will usually bounce or stop.
This is a guide for forex traders that something has affected prices. Unfortunately, we sometimes forget the pattern shape and price formation that is happening. Whatever your reasons for trading forex, focus on the technique you want. Decide which direction you want to work on.
Double Spike Breakout
This technique explains that the trend will continue the previous price mobility. Double spike breakouts indicate that the support or resistance area has been broken. The image below will explain in more detail:
It is important to know that the price can reverse the trend direction very easily and also be able to move for a long period of time. In addition, keep in mind that the price has moved back and forth twice until finally penetrating the support or resistance area. If faced with such a situation, then take advantage of the calculation of the risk ratio by taking a TP: SL of 2: 1 or a profit greater than a loss.
Double Spike Fade
Unlike the spike breakout, the fade spike tends to reverse the trend. So, after knowing the existence of a spike, the open position can be placed in an area that does not contain spikes. If the sphere is above, then the position is placed below and vice versa. For more details, you can see the image below:
after the resistance line or support line has been successfully passed, traders can open positions that are opposite the previous trend. In the following example, you can see a picture of trends after a double spike occurs:
You must remember, this technique can be used on one of the spike patterns. If you use a breakout spike, then you are advised to wait until the price passes the previous spike. But if you use a fade spike, then you are advised to wait until a point of resistance or support forms away from the spike.