How to Island Reversal PatternGreetings, fellow traders! Today, we dive into the Island Reversal patterns, a fascinating subset of price gap structures. Understanding their intricacies can empower us to make informed and strategic trading decisions.
Unraveling Island Reversals:
Island Reversals materialize when prices find themselves marooned amidst gaps, isolated from preceding trends.
Picture this: in a bullish rally, prices surge above the prior session's close, forming an upside gap. After a few sessions, a downside gap emerges, bringing prices below the prior close. This secluded price-range creates the Island Reversal setup, often heralding significant technical declines in bullish trends or robust rallies in bearish trends.
The Influence of News and Volume:
Island Reversals, intriguingly, are often the offspring of news-driven events. To validate these patterns, observe the volume – it should surge significantly on both sides of the gaps. Their rarity in the midst of a rally or descent underscores their potency as trend reversers post the second gap.
Strategic Trading Approach:
Post the reversal, enter a "short" trade below the low of the second downward gap in an uptrend. Conversely, in a downtrend, initiate a "long" trade above the high of the second upward gap. This tactical entry ensures you ride the wave of the emerging trend with precision.
Strategically Placed Stops and Targets:
Prudence dictates placing a "stop" order if the market closes above the high of the Island Reversal pattern for short trades or below the low for long trades. This precautionary measure safeguards your positions, preventing potential losses. As for targets, Island Reversals, being formidable trend indicators, often lead to substantial profits. Set your sights on key event-driven support or resistance levels, guiding your exit strategy.
Island Reversal patterns hinting at impending shifts in market dynamics. By mastering these patterns and integrating them into our trading arsenal, we elevate our ability to navigate the market. Remember, fellow traders, every pattern tells a story; it's our job to listen, decode, and act. Happy trading!
Island-reversal
Island reversal pattern forming for Home Depot?Island reversal pattern forming for Home Depot NYSE:HD ?
Started in Feb 22 almost a year ago after earnings report.
If it completes, exceeding 339, then it will be a bullish reversal and 400-420 will be in play. So for next earnings it's possible that price will gap higher. Still watching though.
This is not advice. Do your own research and trade your own plan!!
TSLA close analysis, 3/23/2023 -- Will it be an island?!I've been tracking a TSLA long term short from a prior idea and was greedy expecting price to trace back to 150 levels. With the bearish nature of the past couple day's moves, a gap down creating an island is just what the doctor ordered for TSLA to continue its downward path.
TLDR Open gap down I’m super bearish. Continue to range in this 190+ zone I will continue to hedge long.
INTC IslandsIslands form when 'prices gap up to the formation and then gap down at the same price level' this is what traders would call an island top, where the initial breakout is upward, forming the island seen, and then a drop back down to the water follows so to speak. With a 23/23 success rate in a bull market according to 'Encyclopedia of chart patterns' islands are a reliable way of picking possible reversal points.
Small but possibly very impiortant bullish pattern on KHCKHC is forming a bullish Island Reversal. Recently the stock gapped down below 29.00 and never filled. Today it gapped above 29.00. Could this be the bottom. It is a retest gap so I will give it a few days to a week to retest to take a small position.
Island Top in play for BTC!!Island Top in play almost exactly similar to January 1994 Platinum.
Wait for an inverted Hammer Doji at the end of the downtrend to confirm the reversal.
in my opinion, if no manipulation happen this is the healthiest way to break the 8K resistance and the beginning of 12K scenario.
AMD Continuation or Breakdown????From the Daily chart we can see a text book Double Bottom pattern emerge just before the breakout and continued uptrend begins.
When we take a closer look at the hourly and 30 minute charts we can see two possibly three island reversals which make taking a trade extremely risky when a commodities price could gap down and leave us stranded. This will further complicate the support lines when this occurs because they become untrustworthy when panic selling begins.
i have labeled a relatively safe support zone on the chart as long as we do not incur any catastrophic sell offs these should remain stable. Note that anywhere past the 21.69 support we could drop off to the last major support at 19.02.
The good news is we have a beautiful triple bottom forming on the 30 minute chart followed by new highs. Along with an uptick in the crypto market and hopefully a renewed enthusiasm for crypto mining we may see a nice push into the mid 20's on this one.
Price Targets @ 23.27, 23.80, 24.00(Mental Resistance), 24.51, 25.17
Look for this to break 23.27 and retest this as support for confirmation of continued upside.
Keep a tight Stop Loss if you decide to take a trade on this to hopefully avoid getting stuck on a reversal island.
Hang Seng reversalI'm gonna let this G20 bullish mania settle a bit and see how these indices react to these gap ups before making a move but this looks like a clear cut reversal head and shoulders coming off an island bottom. Looks bullish. Might miss some of the move if it keeps running from here but if it actually ends up being a valid reversal there will be plenty of profit getting in a bit late.
APPLE: AAPL Island reversal from top still unfilled = vulnerableAPPLE: AAPL Island reversal from the top has still not been filled - so this stock is still vulnerable to sell offs on each rally for now. The entire formation at the high is is a minefield of pin bars. Leave this stock alone until the technical picture improves