As of 09/17/2024   Indus: 41,606 -15.90 0.0%     Trans: 16,014 +171.47 +1.1%     Utils: 1,059 -1.68 -0.2%     Nasdaq: 17,628 +35.93 +0.2%     S&P 500: 5,635 +1.49 +0.0%	YTD  +10.4%    +0.7%    +20.1%    +17.4%    +18.1%	Targets    Overview: 09/13/2024     42,000 or 40,100 by 10/01/2024   16,200 or 15,300 by 10/01/2024   1,100 or 1,000 by 10/01/2024   18,400 or 16,650 by 10/01/2024   5,750 or 5,400 by 10/01/2024
Chart Pattern Indicator: on 9/11/24

As of 09/17/2024   Indus: 41,606 -15.90 0.0%     Trans: 16,014 +171.47 +1.1%     Utils: 1,059 -1.68 -0.2%     Nasdaq: 17,628 +35.93 +0.2%     S&P 500: 5,635 +1.49 +0.0%	YTD  +10.4%    +0.7%    +20.1%    +17.4%    +18.1%
Targets    Overview: 09/13/2024     42,000 or 40,100 by 10/01/2024   16,200 or 15,300 by 10/01/2024   1,100 or 1,000 by 10/01/2024   18,400 or 16,650 by 10/01/2024   5,750 or 5,400 by 10/01/2024
Chart Pattern Indicator: on 9/11/24

Bulkowski on Island Tops and Island Bottoms

Island bottom and top statistics updated on 8/26/2020.

For more information on this pattern, read Encyclopedia of Chart Patterns Second Edition, pictured on the right, pages 464 to 479. That chapter gives a complete review of the chart pattern, including tour, identification guidelines, focus on failures, performance statistics, trading tactics, and sample trade. Below is just a sliver of the information contained in the book.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

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Important Results Identification Guidelines Trading Tips Example See Also

Island Reversal Chart Pattern

The above picture shows an island top reversal. The horizontal arrows point to gaps that align at the same price.

Island Tops and Island Bottoms: Important Bull Market Results

The above numbers are based on 2,000+ perfect trades. See the glossary for definitions.

Island Tops and Island Bottoms: Identification Guidelines

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Island Tops and Island Bottoms: Trading Tips

Trading Tactic	Explanation	The Measure Rule
Measure rule	Compute the height from the highest peak (A in the Measure Rule figure to the right) to the lowest valley in the island (B) and then multiply it by the above 'percentage meeting price target.' Add the result to the price of the highest peak (A, upward breakouts) or subtract it from the lowest valley (B, downward breakouts). The result is the target price, C, shown only for downward breakouts.
Height	Tall islands perform better than short ones.
Throwbacks and pullbacks	pullbacks hurt post breakout performance. Since throwbacks and pullbacks happen so frequently, you can wait for them to complete before taking a position.

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Island Tops and Island Bottoms: Example

The figure shows an example of an island bottom reversal chart pattern. Price enters the island at A by gapping lower and another gap sharing the same price appears at B. The two gaps mark the island bottom boundaries.

You can see why islands do not work well. This one shows price moving up at B and then reversing, throwing back to the breakout price and continuing lower, ending well below the bottom of the island.

-- Thomas Bulkowski

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See Also

• Chart pattern review 5 A review of islands and measured moves.
• A long island is another type of island.
• Gauging Gaps. This article fills in the gaps.
• Trend change detection using a triangle apex.
• Price trends. Consecutively higher/lower closes before the breakout offers performance clues.

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