Island Reversal

An Island Reversal features a grouping of days separated on either side by gaps in the price action. This price pattern suggests that prices may reverse whatever trend they are currently exhibiting, whether from upward to downward or from downward to upward.

• This price pattern occurs when two different gaps isolate a cluster of trading days.
• An island reversal changing from upward trending prices (bullish) to downward trending prices (bearish) is much more frequent than the opposite.
• Short-term exhaustion;  overbought / oversold conditions. (Also see: outside day)

An island reversal on June 11, 2020:

3 months later: the market did move higher, but 

the breadth was poor (small number of stocks participated):

Outside day

Outside day occurs when the low of the day is lower than the previous day’s low and the high of the day is higher than the previous day’s high. Candlestick or OHLC chart displays make it easy to see. Depending on where it occurs on the chart, this may signify a bullish (a) or bearish (b) key technical reversal.

 

(b)

Technical analysis : Ichimoku Cloud

more at (http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:ichimoku_cloud)

The cloud plots key levels of support and resistance that can tell a trader if a stock is in bullish or bearish territory at a single glance. The indicator constructs a shaded area on the charts and if price is above this area it is considered bullish territory, and if price is below it is considered bearish territory. Obviously there is a lot more to it than that, but the finer points of the Ichimoku cloud are just as easy to understand.

BULL/BEAR ZONES
The Kumo is the shaded area that we refer to as the cloud. In general we say that above this shaded area is bullish territory and below this area is bearish territory. The top and bottom of the cloud also serve as key breakout points.

SUPPORT AND RESISTANCE
The kinjun-sen line and the tenken-sen line are both key levels of support/resistance. The kinjun-sen line is also a level that traders often place trailing stops on when day trading. In my trading I use the cloud to time entries and exits. If I am long a stock then I will likely exit the position if the cloud is tested. I also use the cloud to avoid trades that are lower probability setups. This means that I never take a long when price is below the cloud, and I never short when price is above the cloud.

Using the cloud even in a limited capacity can help steer a trader into higher probability setups.