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.

BREAKING DOWN '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
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  2. What are the main differences between a Runaway Gap and a Exhaustion Gap?

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