Nifty Smallcap index formed a classical bullish island reversal pattern during the last week of May 2020 since then index rallied from 4000+ levels to 6000 levels.
An island reversal is short-term reversal pattern that forms with two overlapping gaps. Refer Nifty FMCG Bearish Island Reversal charts for similar examples from the past.
Island gap zone in Small Cap comes around 4040-4060 levels. Though monthly structure currently trading above the Mar 2019 crash high i.e above 5810 levels. Going forward it is one of the important pivot levels to watch from the sentimental reference perspective.
More the price stays down below 5810 levels early the warning for a potential downtrend is progress which can bring a possible 30% crash from current levels towards 4000 odds.
So what do you think about this Island gap reversal? How many months do you think it will take time to fill the gap. Enter your comments below.
