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Islandreversal

Gap opportunity setup -TSLA Gaps are opportunity setups for trading purposes, but why? Because at those times you know for sure that something is happening with the stock so it will move to a certain direction. It gives you a signal of one of the following scenarios: - Someone is "exploiting" news and creating a shakeout to generate liquidity for himself so he can buy more stocks by inducing FEAR into the hearts of the paper hands. - Someone urgently wants to get rid of his stock, so he reduces the price until he finds uninformed value investors who can take from him the stocks. Since he is the puppet master who is a giant of industry relative to the ants of uninformed value investors, there will never be more uninformed value investors demand than his supply, so the gap can't be filled. Note to self: To create educational idea about this. Here I just described 2 scenarios out of 8 possible scenario combinations. You have TrendUP/TrendDown (2) Multiplied X by Gap up/Gap Down (2) Multiplied X by Filled/ Not Filled (2) Equals = (8) combinations. Again, if you don't have the master puppet philosophy of stock market logic, you are always confused. If you look at the market like the master puppet, everything makes sense and you have calm and easy trading. See my other posts about the puppet master theory and philosophy to know more. See that there is an upcoming earnings in TSLA very soon, the stock is just begging to move... If the stock will remain in place, and there will be gap up in earnings, there will be Island pattern so this is clear strong indication to the LONG side...
NASDAQ:TSLALong
by ZoharCho
4
How to Trade with the Island Reversal PatternHow to Trade with the Island Reversal Pattern Price action analysis serves as a pivotal methodology in financial markets, offering a means to assess and determine the future price movements of various assets, including stocks, currencies, and commodities. Among the many tools employed within this method, the Island Reversal pattern stands out as a significant indicator of potential trend reversals. What Is an Island Reversal Pattern? The Island Reversal is a technical analysis pattern that signals a potential trend reversal. It typically occurs after a strong uptrend or downtrend and is characterised by a gap in price action, isolating a group of candlesticks. The pattern suggests a shift in market sentiment, indicating that the previous trend may be losing momentum. How to Spot an Island Reversal in the Chart To identify the setup, traders pay close attention to the following characteristics, which can manifest in both bullish and bearish market conditions: Strong Trend: - Bullish: This pattern often materialises after a prolonged downtrend. It signifies a potential price change to the upside. - Bearish: Conversely, in a bullish market, the pattern emerges following a sustained uptrend, suggesting a possible change in a trend to the downside. Gap in Island Reversal: - Bottom Island Reversal: In a bullish context, there is a gap down, creating an "island" of isolated candlesticks, indicating a shift from bearish sentiment to potential bullish momentum. - Top Island Reversal: For a bearish reversal, there is a gap up, isolating a group of candlesticks, signalling a transition from bullish to potentially bearish market sentiment. Isolation: - Bullish Island Reversal: The gap is created by an upward movement that is isolated from the surrounding price action, forming the characteristic island formation. - Bearish Island Reversal: In a bearish context, the gap is formed by a downward movement that does not overlap with the previous, creating a distinctive island formation. How to Trade the Island Reversal Traders employing the setup adhere to a systematic strategy for identifying and capitalising on a potential change in a trend. Patiently awaiting confirmation of the reversal through subsequent price action, traders enter the market upon the break of isolation, where the price decisively moves below (for a bearish scenario) or above (for a bullish scenario) the isolated island. Profit targets may be set by considering key support and resistance levels to potentially enhance precision. The placement of stop-loss orders just above or below the pattern is a critical risk management component. Traders carefully assess the risk-reward ratio to align potential profits with associated risks. This holistic approach reflects a commitment to disciplined decision-making, combining technical analysis and prudent risk management in navigating the complexities of financial markets. Live Market Example The TickTrader chart by FXOpen below shows a bearish setup. The trader takes the short at the opening of the new candle below the Island. Their stop loss is above the setup with a take profit at the next support level. The Bottom Line Although the Island Reversal is a popular technical analysis tool, it's crucial to wait for confirmation and consider other technical indicators to potentially increase the probability of an effective trade. As with any trading strategy, risk management is key to mitigating potential losses. Always adapt your approach based on the specific conditions of the market and use the pattern as one of several tools in your trading arsenal. To develop your expertise, open an FXOpen account to trade in numerous markets with exciting trading conditions. FAQs Why Is Risk Management Important When Trading the Island Reversal? The pattern is considered a strong signal of a change in the price direction, but like all technical patterns, it is not infallible. There is always a risk that the pattern may fail to lead to the expected price movement. Effective risk management helps limit losses in case the trade doesn't play out as anticipated. Should Traders Solely Rely on the Island Reversal for Trading Decisions? No, traders always wait for confirmation and incorporate other technical indicators to potentially enhance the probability of an effective trade. The pattern should be regarded as just one of several tools in a trader's toolkit. Is There a Platform Where Traders Can Apply Their Knowledge of the Pattern in Live Markets? Yes, traders can explore FXOpen’s free TickTrader trading platform to trade in over 600 markets and apply their understanding of the pattern in practical trading scenarios. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
NASDAQ:AMZNEducation
by FXOpen
4
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!
Education
by Vestinda
TSLA Relief Rally *Be Careful-(Short Term Bullish)***Warning Monday Jan 2nd (Market is Closed) - Q4 EV Deliveries - good report then TSLA will complete H&S pattern and continue Bullish Island Gap Reversal Positive: `TSLA is Very Oversold, we could see a continuation of this bounce up too 150-180 if production release is great on Monday. -Bullish Chart patterns show inverse H&S pattern created by Island Gap Reversal. LARGE Buying Volume strong-sign of institutional investment - this could be accumulation phase Beginning of January tends to be positive for the stock market NDX & SPX showing signs of upcoming relief rally (*before we make final leg down) HYG & JNK Bonds are showing bullish divergence Negative: Monday possible less deliveries than expected -if is lack luster I can see TSLA dropping 7-12% to retest the low China Covid Cases/ Shanghai Factory Slow production Tesla is still in a Strong Bear Market pattern Elon and Twitter Drama Earnings report on the 23rd - with factory issues, supply issues - it does not look promising Macro H&S Pattern puts the measured decline to $90-$80 range Sentiment: Short Term -Swing /Day Trading -I am only Bullish for the Short Term* (1-2 weeks) . Long Term Investing: I am Bullish for Long Term (5 yrs) ....over-all I would choose the $109 area as 1st pt accumulation / $80 area second point / $60 area 3rd pt (TSLA will Grow 25% Sales YoY for next 5yrs) PEG ratio looking good
NASDAQ:TSLALong
by Black_Sheep1
3 Directions to ConsiderThe previous Ascending Triangle Pattern was bang on target. The triangles base support is now the Resistance. The price has no Trend. Zoom Out to find bigger patterns or trends. Short squeezed, a lot of stocks opened on an island. After rejecting 200 MA tech is sitting perched with only a gap down or up. Inflation and rising Energy costs are pinching pockets. Credit rates are eating into bottom lines. Sitting Right up top for an Island Reversal with SPX. Seems like it would be a good place to buy a straddle. NVDA is down 4.6% after earnings. After closing, AMZN announced tonight it will be shutting down Amazon Care. I’m going to lean bearish for direction.
NASDAQ:AMZNShort
by SPYvsGME
2
Island Reversal PatternThe Island Reversal pattern is when increased distributions in overnight activity cause gaps up and eventually volume exhaustion a second gap down forming an island of candles. The Island Reversal can be Bullish (inverted island) or a Bearish Island and is preceded by lengthy trends with a reversal trend the other way. No real profit targets for the island reversal. I would just use the island as a head as it seems to fit the profile of a head and shoulders pattern or double top / bottom. Island Reversals are not common and traders are mixed on the results. Credit to Vixtine for island reversal.
SP:SPXEducation
by SPYvsGME
4
Retail leader $DG with tight baseDollar General is a huge discount retailer that plans to get even bigger. After a nasty island reversal in May, NYSE:DG has recover very well. This tight action in price has caught my eye and today is making an inside bar with pivot buy at $256.10. You can even say that is forming a cup & handle. The bad thing is that it publishes earnings next week so, expect volatility. But, as the I like this base, I'll buy half a position and wait confirmation with a breakout above $262.50. NASDAQ:DLTR is another retail leader that is making the same pattern.
NYSE:DGLong
by dpuleo19
NIFTY SMALL CAP INDEXHello & welcome to this analysis on the small cap index CNX Small Cap Index activated a Bullish Harmonic Deep Crab on 24th Feb at 9350. From there it has now move all the way 10900 and on its way created 4 gap ups which is usually the sign of a strong trend (typical of Elliott Wave 3) What is most interesting is on 4th April it activated a Bullish Island Reversal as highlighted in the chart suggesting "if this holds" then the index is all set for a v strong up move. We have already seen a similar kind of move in Bank Nifty when it made a Bullish Island Reversal on 10th March at 34500 from where its rallied 4000 pts. Levels wise a "daily close above 10975" would open the passage for 11700 with strong support in the island region of 10600-500 for now. Happy Investing!
NSE:CNXSMALLCAPLong
by Dinesh_C_Nagpal
F5 Networks $FFIV, island reversal patternF5, Inc. is an American company that specializes in application delivery networking, multi-cloud management, application security, and online fraud prevention. This stock has a really good relative strength against its sector, the quotient with AMEX:IGN confirms that. Recent price action shows an island reversal pattern, downward and upward gaps around $200 and $194. This pattern often has throwbacks and it already happened tested the 50-day MA and rebounded. Now, its trying to make an early breakout with low volume. The thing is that is giving bullish signs that it could make the real breakout above the $215 zone. Today could be good to add a small percentage of the position and then add the rest when the breakout above $215 happens.
NASDAQ:FFIVLong
by dpuleo19
NIO: Will it reverse the trend? Let's see.Hello traders and investors! Let’s see how NIO is doing today! Since our last analysis, NIO dropped sharply, frustrating the bullish bias seen in the short-term. However, the drop was perfectly controlled, as the price just found its support again, at the black line around $ 36.68. Now the challenge is to climb all the way back to the $ 40.59 and fill the last gap, as this will put an end to the bearish sentiment this Island Reversal is causing on NIO. The daily chart looks just ok. We have no amazing bullish signs, but nothing is telling us that it’ll drop now. On the bright side, we had a Hammer candlestick pattern yesterday, just after it hit the support level. The problem is the 21 ema , which is holding the price today. I see that NIO is doing well, and since it just hit the support level, it looks more bullish than bearish to me, but we must wait for more confirmation signs. The Piercing Line pattern in the 1h chart was a good start, but if we see another bullish pattern, it’ll confirm a mid-term reversal, maybe to the $ 46 again. If you liked this analysis, remember to follow me to keep in touch with my daily updates, and please, support this idea if it helped you! Have a good day.
NYSE:NIO
by Nathan_The_Finance_Hydra
3
TSLA: Key points for the next week!Hello traders and investors! Let’s see how TSLA is doing today! Yes, TSLA retested its Fibonacci’s Retracements , and now it is trying to do a reaction. The $ 695 seems to be a pivot point , which might make TSLA fly again, but it wasn’t triggered yet. The Island Reversal chart pattern is still valid, and this is another thing that reinforces the bullish thesis here. The problem is the 21 ema in the daily chart: The 21 ema is working as a resistance for us, and TSLA must defeat it in order to fly again and seek its next resistances. I like the fact that TSLA did bearish candlesticks in the last two days, but the volume was quite low. I know that it went up today, but the candlestick is still back. We closed under the 21 ema, and this is frustrating. If this ruins the bullish bias or if it’ll seek the gap at $ 732 it is for us to decide. Next week we’ll have more to work with. If you read this far, remember to follow me to keep in touch with my daily studies. Have a good weekend!
NASDAQ:TSLA
by Nathan_The_Finance_Hydra
4
What could save Nasdaq?The Nasdaq 100 did an island reversal in the 30m chart, but it is at a support level again.The triple bottom and strong RSI divergence still persists. We have no buy sign yet, but if it does, it will be a good one. In the 4h chart, Nasdaq hit again the 13,716 and it dropped to the next support level. The next hours will be decisive for the index, and if we see anything good, we can nail a good trade. If you liked this trading idea, remember to click on the “Follow” button to get more trading ideas like this, and if you agree with me, click on the “Agree” button 😉. See you soon, Melissa.
TVC:NDQ
by UnknownUnicorn21312077
23
AAPL: Finally reversed the trend! What now?Hello traders and investors! Yes, it seems all the patterns we discussed in our last study worked quite well, even better than I expected. Let’s see what’s next for AAPL. First, in the 1h chart the Island Reversal pattern, which we talked about last week, worked wonders, and AAPL finally defeated the resistance at $ 124, breaking free from the congestion . And if you missed our previous study, the link to it is below this analysis, as always. Now, AAPL is officially in a bull trend, and there’s no pullback/reversal signs ahead . If it drops to the 21 ema, it would be a natural movement and wouldn’t ruin the bull trend at all. Now, to the daily chart: Yes, AAPL triggered the Triangle pattern we also discussed last week, and this is a great sign. The Morning Star was the clue about the next movement, but I wasn’t expecting it would be that strong. Now AAPL reached its resistance at $ 128.72, and it is trading slightly above it. If it closes under this blue line, we might see some correction, but again, that would be fine, as it would hardly ruin the bull trend, and it could offer a buy opportunity. But as long as AAPL keeps above this blue line, it’ll remain very bullish. Definitely it is not the time to buy AAPL , as the time to buy is when it is near support levels, not resistance levels. Let’s keep monitoring it closely, and if you liked this analysis, remember to follow me to keep in touch with my daily updates, and support this idea if it helped you! Thank you!
NASDAQ:AAPL
by Nathan_The_Finance_Hydra
2