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Island Bottom Reversal

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Contributor
Gap Gurus please assist BIL has moved strongly in the last few sessions. Is this likely to continue? Which is the next resistance level? Would one call BIL's Chart formation an `Island Bottom Reversal' Gap which occurred between the 16th January and 1st February or what type of Gap did BIL form. Is this Gap a long term continuation of the trend? Is this the right time to take a long entry position?
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2 REPLIES 2
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Super Contributor
Bil has two areas of resistance first at 250 and next at the previous high 258. Both the RSI and stochastics are approaching over bought areas(not to say that they can't stay here and make new highs) the possibility therfore exists that this gap on friday is an exhaustion gap. If I were looking to go long on BIL I would wait for it to break the previous high with good volume or better wait for it to pull back to this area of support and hold above this level before taking off on the next leg of the upside (form a high base). Given that the TOP 40 is still in a down trend, going long BIL at these levels after the run its had is not advisable. Thursday is the day and you never hold a share over earnings or anouncements. So unless you want to be in the market for two or three days and hope to get 5 or 6 % at high risk I wouldn't and wont be buying BIL now.
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Valued Contributor
BIL is not a true Island reversal, the second leg wasn't a gap. Check out issue 2 of the educational newsletter for more on Island reversals. On the menu; help and education; educational newsletter.
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