Morning Charting- The Island

I am a Technical Analyst. I don't believe that fundamentals really offer as much insight into the short/medium/long term prospects of a company as Technical Analysis. So with that said, time for some knowledge.



The Island is a fantastic charting pattern in my opinion due to the high predictability of it. An island requires it to be retested at some point in the future and how the market goes about testing the island gives you a great look at who is in control of the market. It is a reversal pattern, so there are a couple of ways you can interpret outcomes when it comes to an island.



-The first is where sellers extend down a little bit and then allow buyers back in to test the islands range much too optimistically before taking back control and extending downward to the origin of the pattern




-The next is when sellers get ahead of themselves without testing some part of the range of the island, leaving that test outstanding. This creates a magnetic attraction to those prices and if sellers take the downleg too far, to fast, that excessive pessimism gets exploited by buyers and the retest of the island is a mere blip before powering to higher highs.

There are more outcomes and there are a lot more variables to consider but this is not a TA blog and I thought a little bit of TA knowledge can't hurt.