DislikedIt depends what timeframe you're looking at.
A spike can happen on the weekly and take 5 days or on the 4 hr and take 20 minutes for the bulk of the move.
I think the tricky thing about exhaustion spikes is that there is no quantitative definition. It would be impossible to give a description of one without taking into account the price action in the vicinity of the spike. So I would say, if the market rallys 150 pips and then retraces the whole rally within a day while the average daily range of that period was, say 70 pips, then you have seen an exhaustion spike. (see chart)
Jacko discusses exhaustion spikes as a way to look for retraces (especially with regards to the now suspended counter-trend strategy). But the term isn't really specifically defined.
I like the James16 approach to exhaustion spikes specifically because there is a working definition. If you haven't checked it out, you should, you will be glad you did.
In general, the more violently/quickly a spike happens the stronger the signal. (The more buyers/sellers are coming in at that level). Also, if the spike happens in high-volume trading that is also a good indication of at least a short term top/bottom.
I don't know if anyone remembers the Vegas Wealth Builder system? But Vegas used something similar to define a daily reversal, and used the speed of the reversal as part of the criteria for entering a trade. (Ie. the faster the reversal, the more convincing)
Hope this helps. Comments welcome. Can't tell if I made a lot of sense.Ignored
EURUSD bear are defintely trying to make a comeback!!