Rather than toss a coin, combine volume study with pattern analysis and technical indicators to determine which outcome is likely. This process of cross-verification eliminates bias and always improves the bottom line. Spikes that follow an extended uptrend or downtrend generally flag a significant reversal. These find confirmation through relative strength indicators that have extended well into overbought or oversold territory. A PS event accompanied by price surging through significant support or resistance provides verification of a breakout or breakdown.
Pivot spikes exhibit more subtle properties.
These events often arise in the middle of well-defined trading zones. Watch out for preplanned stock activity that negates a Power Spike's technical value. High volume days may not arise from an emotional crowd. The underlying company could be issuing a secondary stock offering of many million shares. Or a significant investment by a single holder could be scheduled to execute on that date.