Bullish Island Reversal Pattern & Exhaustion Gap

A: What type of gap is A1?
Possibly a continuation gap or exhaustion gap. This gap is questionable because it is unconfirmed.

A2: This is confirmation that A1 is an exhaustion gap.
This gap is now at least a temporary exhaustion gap. An exhaustion gap breaks out in the direction of the current trend, and then it will reverse direction and break the previous major support price. When it breaks the previous major support, then it is a confirmation.

B: What type of chart pattern is this?
This is a bullish island reversal pattern. It involves two gaps. I gap downward and a gap higher that will close the previous gap. A bullish island reversal pattern is an indication that the price will go higher.

C: How to interpret volume with price gap?
I heard before that high volume is associated with a continuation gap, and low volume is associated with an exhaustion gap. I don't know. I am going to answer this question with a maybe. Volume was high with gap A1 in the chart, but the price quickly reversed direction.

Thank you for reading!

Greenfield












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Disclosure: Article written by Greenfield. A market idea by Greenfield Analysis LLC for educational material only.