Island Reversal

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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.