What counts as a volume spike?

RSI Monitor flags a volume spike when a candle's volume reaches at least 3× the 20-candle rolling average.

The 3× threshold is intentionally conservative: it filters out most routine volatility and highlights only genuinely unusual market activity.

Why volume spikes matter

Markets rarely move aggressively without participation. A sudden surge in volume usually means attention, emotion, liquidation, positioning, or large players entering the market.

But volume alone is not enough. The meaning of a spike depends entirely on where it happens and how price reacts around it.

How traders interpret spike context

  • Spike + bullish candle at support: panic selling gets absorbed and rejected. Often a strong reversal signal.
  • Spike + bullish breakout through resistance: continuation behavior. Momentum expansion becomes more likely.
  • Spike + bearish candle at resistance: possible distribution. Large sellers may be unloading into strength.
  • Spike + bearish breakdown below support: capitulation may still be unfolding, with further downside risk.

The most common mistake

Many traders try to enter immediately after seeing the spike itself.

But spikes are events — not confirmations. The better entry usually comes from the next candle confirming the move.

By the time a 3× spike appears on the chart, a large part of the move may already be finished.

Combining volume spikes with RSI

Volume spikes become significantly more useful when combined with market structure and momentum context.

A volume spike + oversold RSI + major support is one of the cleanest dip-buy setups. A volume spike + overbought RSI + resistance is one of the clearest short setups.

Without those additional layers, a spike alone is often just noise.