It’s funny, some friends of mine a few weeks ago were asking me about Island Reversals. Apparently they were arguing about whether a breakout in some stock was sparked by an island reversal or not. I came to the conclusion that they were both wrong, but I appreciated their interest in this rare pattern. The point I tried to make to them was that it wasn’t so much about what it’s called, but more about its implications. And they had the implications right, which is all that mattered.
I don’t see too many of these things, but this week we got a classic example of the ever so elusive “Island Reversal”. [Read more…]