# Spike Rules

Also known as: Market Profile spike rules.
A Volume & Order Flow concept (Market profile / auction theory) in the LuxAlgo Library, with 1 indicator implementation.

## What are spike rules?

Spike rules are the Market Profile guidelines, set out by James Dalton and his co-authors, for judging a late-session breakout by where the next session opens. A spike is a fast move away from the day's value in the final period or two of trading. It ends too late to pass the time-and-volume acceptance test of [auction market theory](https://www.luxalgo.com/library/concept/auction-market-theory/), so the verdict waits for the next open, measured against the spike base (where the break began) and the spike extreme (where the session ended).

For an upward spike, mirrored for a downward one: an open above the spike is acceptance and the most bullish case; an open within the spike is weaker acceptance, with two-sided trade expected and the base as the level to hold; an open below the base is rejection, turning the spike into a selling tail, a form of [excess](https://www.luxalgo.com/library/concept/excess/). The updated edition of Mind Over Markets (2013) gives spikes their own section, covering openings within and outside the spike and the spike's reference points.

## How to apply the spike rules

Two marked levels and one observation:

1. Once a late break leaves the profile thin beyond the day's range or value, mark the spike base and the spike extreme.
2. Classify the next open: beyond the extreme, within the spike, or back through the base.
3. Watch the early trade: an open within the spike that falls back through the base is commonly read as turning toward rejection.

## How traders use it

- Setting the next session's bias before the bell, refined by the [open types](https://www.luxalgo.com/library/concept/open-types/) that describe how the open then trades.
- Placing risk: the spike base is the usual stop reference for trades in the spike's direction, and an accepted spike's base is watched as support or resistance on later revisits.
- With limits: the rules are guidelines, not certainties, and 24-hour markets need a defined session boundary first.

## Spike rules vs related profile reads

- **Excess** (https://www.luxalgo.com/library/concept/excess/): A completed rejection tail at an extreme. A spike is undecided at the close and becomes excess only if the next session rejects it.
- **Single Prints** (https://www.luxalgo.com/library/concept/single-prints/): The profile condition a spike usually leaves behind; the spike rules decide what those late single prints mean.
- **Open Types** (https://www.luxalgo.com/library/concept/open-types/): Open types classify how a session trades after the bell; spike rules classify where it opens relative to the prior day's late breakout.

## FAQ

### How late does a move have to be to count as a spike?

Practitioner definitions usually place it in the final 30-minute period of the regular session, sometimes the last hour. What matters is that the move ended before the market could show acceptance.

### Is an open within the spike bullish or bearish?

For an upward spike it is read as acceptance, so bullish, but less decisively than an open above the spike. Holding the base keeps that read; trading back through it weakens it.

### Are spike rules related to spike and channel?

No. In [spike and channel](https://www.luxalgo.com/library/concept/spike-and-channel/), a price-action pattern, the spike is a strong breakout leg followed by a slower trend channel. Dalton's spike rules concern a late-session Market Profile breakout and the next open.

## Implementations in the Library

- Spike Rules (LuxAlgo): https://www.luxalgo.com/library/indicator/spike-rules/

## Related concepts

- Auction Market Theory: https://www.luxalgo.com/library/concept/auction-market-theory/
- Initial Balance: https://www.luxalgo.com/library/concept/initial-balance/
- TPO Profile: https://www.luxalgo.com/library/concept/tpo-profile/
- Single Prints: https://www.luxalgo.com/library/concept/single-prints/
- Poor High/poor Low: https://www.luxalgo.com/library/concept/poor-high-poor-low/
- Unfinished Auction: https://www.luxalgo.com/library/concept/unfinished-auction/
- Excess: https://www.luxalgo.com/library/concept/excess/
- Balance vs Imbalance: https://www.luxalgo.com/library/concept/balance-vs-imbalance/
- Rotation Factor: https://www.luxalgo.com/library/concept/rotation-factor/
- One-timeframing: https://www.luxalgo.com/library/concept/one-timeframing/

---

Source: https://www.luxalgo.com/library/concept/spike-rules/ (LuxAlgo Library, the encyclopedia of trading & technical analysis). Free to use with attribution: https://www.luxalgo.com/library/license/