Following a spike, price will consolidate towards the highs. These work best when visible on 1hr timeframes. When price retreats back down (or up), the bottom of the consolidation zone acts as support (or resistance) go long (or short) at the base of the initial spike’s consolidation zone. These are best played on a 1 hour or greater timeframe, and “V” shaped charges, back into the level should be avoided. The consolidation zone is a prerequisite. Perhaps easier said,
1. Price spikes out of a consolidated range
2. Price pulls back, making a ‘flag’ pattern
3. When price revisits the bottom of the flag, its used as support
Once you start noticing them you’ll see them alot….they happen more often than you might think.
Click any of the images to expand.
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