How is a spike characterized in trading terms?

A spike in trading terms is characterized by significant price movements that are much greater than the usual fluctuations. This typically indicates increased volatility and often suggests a strong market reaction to news, events, or changes in trader sentiment. During a spike, prices may rise sharply (upside spike) or drop sharply (downside spike) within a short period, reflecting high trading volume and rapid buying or selling activity.

The nature of a spike distinguishes it from days of minimal volatility, moderate price movements, or stable prices, as these do not capture the essence of drastic changes in market behavior. A spike portrays a moment of heightened intensity in trading, often leading to strong implications regarding market trends and trader psychology.