Island Gap reversal is one of my favorite trade setups. Which we talked about it numerous times in our blog with live examples. Following are some of the trade setups and tutorials.
In theory, island gap reversals are nothing but a gap closed by another gap. No volume occurs in this zone. This zone is a high probability short term zone. At times it gives trading opportunities and at times it even provides investing odds as well where the destination target is always the filling of the gap.
How long it takes to cover the target zone?
From the Island reversal gap, steeper the fall then recovery odds are likely to be slow. In such a case anywhere between 1-2 month could be an ideal scenario, especially in a highly volatile environment. If deeper the size of the gap the recovery can extend up to 5-6 months.
Current Island reversal gap is between 27290 – 26706, however, fall from the island reversal zone is steeper. Hence an ideal revisit towards the zone is likely to be expected in 1-2 month duration with a higher probability. Current fair price of Bank Nifty Futures for the year 2018 (POC – point of control ) is around 26427 and Bank Nifty currently trades below the fair price point.
If you are new to Point of control then remember this. Point of control often acts like a magnet where more price activity can happen and trading activity mostly centers around Point of Control zone. #MarketProfile