# Spike and Channel Also known as: spike and channel trend, spike and channel bull trend, spike and channel bear trend. A Chart & Candlestick Patterns concept (Continuation chart patterns) in the LuxAlgo Library, with 1 indicator implementation. ## What is a Spike and Channel Trend? A spike and channel is Al Brooks' name for one of the most common shapes a trend takes: a spike, a breakout made of strong consecutive trend bars with little overlap, then a pullback, then a channel that continues in the same direction at a shallower slope. Brooks' glossary defines it as a breakout into a trend whose follow-through takes the form of a channel with less momentum, and his list of abbreviations spells out the minimum: a breakout, a pullback, then at least two more legs in a channel. The two phases describe two different markets. The spike is urgency: one side overwhelms the other and price reaches a new level fast. The channel is the same trend once the other side participates, with overlapping bars, tails, pullbacks and what Brooks calls evidence of two-sided trading. He treats a channel as a sloping [trading range](https://www.luxalgo.com/library/concept/trading-range/) in the making and teaches that spike and channel trends usually evolve into a trading range. When the channel ends, the correction often reaches back toward the start of the channel, the extreme of the pullback that followed the spike; in a bull trend, that is where buyers commonly try to build a double bottom bull flag. The vocabulary comes from Brooks' books, Reading Price Charts Bar by Bar and the three-volume Trading Price Action series. The shape is fractal: Brooks notes that a tight, steep channel with only small, brief pullbacks is a spike on a higher-timeframe chart, so one move can be a spike on one chart and a channel on another. ## How to identify a spike and channel The spike qualifies the pattern; the channel is judged by how much weaker it is than the spike. 1. Find the spike: one or more strong trend bars closing near their extremes, with little overlap and no meaningful pullback, often a [breakout](https://www.luxalgo.com/library/concept/breakout/) from a range or a gap. 2. Mark the first pullback after the spike. Its extreme, the low in a bull trend, is the start of the channel. 3. Confirm the channel: the trend resumes at a shallower angle with overlapping bars, tails and pullbacks, contained by a [trendline](https://www.luxalgo.com/library/concept/trendline/) and a parallel trend channel line. 4. Count the legs: Brooks wants at least two legs in the channel, and three pushes in a wedge-like shape is a common ending. 5. Watch for the end: a trendline break followed by a failed test of the trend extreme says the channel phase is over. ## How traders use it - Trading with the spike: a strong spike is a reason not to fade. Brooks-style traders buy the first pullbacks after a bull spike, or sell them after a bear spike, often counted as [High 1 and High 2](https://www.luxalgo.com/library/concept/bar-counting-h1-h2/) entries. - Trading inside the channel: with-trend entries still work but lose probability as bars overlap, so traders enter near the trendline and take profits near the trend channel line. Once a channel is broad and two-sided, some fade its extremes. - Planning the correction: after the trendline breaks and the trend extreme fails to extend, the start of the channel becomes the first target for countertrend trades and the area where with-trend traders look for a [double bottom](https://www.luxalgo.com/library/concept/double-top-bottom/) flag. - Honest limitation: channels often run further and longer than the countertrend side expects, and the test of the channel start is a tendency, not a schedule. Fading a channel before its trendline breaks is where the pattern costs traders most. ## Spike and channel vs related structures - **Bull/bear Flag** (https://www.luxalgo.com/library/concept/bull-bear-flag/): A flag is one brief pause after a pole that resolves in the pole's direction. After a spike, the trend instead continues as a slower channel of several legs. - **Channel Continuation** (https://www.luxalgo.com/library/concept/channel-continuation/): A continuation channel slopes against the prior trend and is traded for its break back in the trend's direction. The channel in a spike and channel slopes with the trend and is itself the continuation, until it breaks. - **Climactic Moves** (https://www.luxalgo.com/library/concept/climactic-moves/): A climax accelerates into the end of a trend; a spike and channel decelerates, with the channel weaker than the spike. Brooks lists spike and climax as a variant of the pattern, for when the follow-through after the spike is itself climactic. ## FAQ ### What is the start of the channel? The extreme of the pullback that follows the spike: the pullback low in a bull trend, the pullback high in a bear trend. The channel's first leg begins there, and it is the level Brooks-style traders expect the eventual correction to test. ### Does price always return to the start of the channel? No. Brooks teaches it as a common tendency, not a rule. Some channels turn into a trading range before reaching it, and some trends resume from a shallower correction. ### How do you tell a spike from a channel? By overlap and pullbacks. Spike bars are large, close near their extremes and barely overlap; channel bars overlap, carry tails and alternate with pullbacks. The answer depends on the chart: a tight channel on a 5-minute chart can be a single spike on a 60-minute chart. ## Implementations in the Library - Spike and Channel (LuxAlgo): https://www.luxalgo.com/library/indicator/spike-and-channel/ ## Related concepts - Rising/falling Wedge: https://www.luxalgo.com/library/concept/rising-falling-wedge/ - Bull/bear Flag: https://www.luxalgo.com/library/concept/bull-bear-flag/ - Pennant: https://www.luxalgo.com/library/concept/pennant/ - Rectangle: https://www.luxalgo.com/library/concept/rectangle/ - Channel Continuation: https://www.luxalgo.com/library/concept/channel-continuation/ - Cup & Handle: https://www.luxalgo.com/library/concept/cup-and-handle/ - Scallop: https://www.luxalgo.com/library/concept/scallop/ - Measured-move Up/down: https://www.luxalgo.com/library/concept/measured-move-up-down/ - Ascending/descending/symmetrical Triangle: https://www.luxalgo.com/library/concept/ascending-descending-symmetrical-triangle/ - High Tight Flag: https://www.luxalgo.com/library/concept/high-tight-flag/ --- Source: https://www.luxalgo.com/library/concept/spike-and-channel/ (LuxAlgo Library, the encyclopedia of trading & technical analysis). Free to use with attribution: https://www.luxalgo.com/library/license/