Island Reversal

AAA

DEFINITION of 'Island Reversal'

An occurrence in technical analysis where a stock price will gap up/down, trade higher than this price, and then gap down/up below the initial price.

INVESTOPEDIA EXPLAINS 'Island Reversal'

When a stock indicates an uptrend, trades above the gap which occurs, then gaps back down and trades below the initial price, an island reversal has occurred.

RELATED TERMS
  1. Gap

    A break between prices on a chart that occurs when the price ...
  2. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  3. Runaway Gap

    A type of gap on a price chart that occurs during strong bull ...
  4. Reversal

    A change in the direction of a price trend. On a price chart, ...
  5. Breakaway Gap

    A term used in technical analysis. A breakaway gap represents ...
  6. Exhaustion Gap

    A gap that occurs after the rapid rise in a stock's price begins ...
RELATED FAQS
  1. What are the best technical indicators that complement the Percentage Price Oscillator ...

    The percentage price oscillator (PPO) is calculated by subtracting a long-term exponential moving average (EMA) from a shorter-term ... Read Full Answer >>
Related Articles
  1. Charts & Patterns

    Advanced Candlestick Patterns

    Go beyond the basics! Learn to identify and trade island reversals, kicker patterns and more.
  2. Mutual Funds & ETFs

    How To Apply Technical Indicators To Mutual Funds

    Mutual funds do not readily lend themselves to technical analysis, but investors can use common indicators to evaluate mutual funds as easily as stocks.
  3. Stock Analysis

    A Trader's Look at the S&P 500

    Moving averages are sending an important signal, and it's probably not what you think.
  4. Chart Advisor

    Is Now the Time to Invest in North America?

    Bullish chart patterns across the North American markets suggest that now might actually be a wise time to allocate closer to home.
  5. Chart Advisor

    These Oil Service Stocks Are Ready For A Move Higher

    In the oil services sector, active traders have been trying hard to establish a floor and the double bottom pattern that is appearing on the chart suggests that a short-term reversal could be ...
  6. Trading Strategies

    The Top Five Stocks For Novice Swing Traders

    New to Swing Trading? Here are the top five stocks recommended for swing trading.
  7. Chart Advisor

    These ETFs are Breaking Out of Chart Patterns Now

    Three buys and one sell; here are four ETFs breaking out of chart patterns right now.
  8. Trading Strategies

    Capitalize On Collars To Enhance Your Trades

    Trade collaring measures current technicals and makes swift adjustments to account for environmental changes.
  9. Trading Strategies

    Look At The Whole Picture To Manage Whipsaws

    Look at past action to organize a whipsaw’s volatile characteristics, identifying harmonic levels that may offer low risk entry prices.
  10. Chart Advisor

    Profit From the Range in These Stocks and ETFs

    These four stocks just bounced off range support, offering profit potential to the upside.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center