<\/p>\n
In general terms,\u00a0island reversal <\/strong>can be defined as a compact trading activity within a range of prices, separated from the move proceeding it; this separation is caused by an\u00a0exhaustion gap\u00a0and the subsequent move in the opposite direction occurs as a result of a\u00a0breakaway gap.<\/p>\n <\/a><\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n Close scrutiny of island reversal formations shows that the island reversal consists of an\u00a0exhaustion gap\u00a0and the subsequent move is followed by a\u00a0breakaway gap. Uncommonly, the breakaway gap that completes the island is filled in a few days by a pull back as a result of the reaction. The island reversal can occur at the peak or the reverse of\u00a0head and shoulders formations.<\/p>\n <\/p>\n <\/p>\n For example, assume that the price in a rising trend closes at its high of $84.00 and opens at $86.00 the following day and then does not fall below its opening. Near the end of the day, it moves up further and touches $88.00 but closes at $87.60 however. Observation thus shows a gap of $2.00 which is not filled. On the following day market price open at $87.40, touches high of $88.90 and closes at $87.00. A few days later or the very next day, market price opens at $84.00 and closes at $82.90, keeping itself below the area of $86.00 and $84.00. All the trading above $86.00 will appear on the technical analysis chart to be isolated and is known as, an island reversal.<\/p>\n <\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Island Reversals In general terms,\u00a0island reversal can be defined as a compact trading activity within a range of prices, separated from the move proceeding it; this separation is caused by an\u00a0exhaustion gap\u00a0and the subsequent move in the opposite direction occurs as a result of a\u00a0breakaway gap. The Island Reversals Formation […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":112,"menu_order":8,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_mi_skip_tracking":false},"yoast_head":"\nThe Island Reversals<\/h6>\n
Formation<\/span><\/h2>\n
Characteristics<\/span><\/h2>\n
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Continue to the next lesson<\/a><\/h2>\n