Island Reversal

Island Reversal

In technical analysis, a pattern in which a security's price does one of two things. It may suddenly gap up (i.e. it suddenly begins trading well above its previous high) and then gap down again to its previous level. This is considered a bearish signal. On the other hand, island reversal may involve a gap down to a new low, and then a gap back up to the previous level. This is thought to be bullish. In any case, island reversal is a short-term indicator.
References in periodicals archive ?
The excursion above 40 turned out to be an island reversal, when a stock gaps up, lingers a while, and then gaps right back down again.
I'm looking for further signs of support at 14, but the island reversal that began on May 18 and ended on June 20 draws the eye toward 15, and that looks to be the next important hurdle.