Don't Ignore This Chart

Basic Materials SPDR Produces Two Island Reversals in Two Months


Recent volatility is making rare patterns not so rare. The chart below shows the Basic Materials SPDR (XLB) with its second Island Reversal in as many months. The most recent pattern formed with a gap down on Thursday, a consolidation Friday-Monday and a big gap up today. Shorts on Thursday-Friday-Monday are now trapped on the island with losses.

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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at He has written articles for numerous financial publications including Barrons and Stocks & Commodities magazine. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed technician. In addition to his CMT designation, Arthur holds an MBA from the Cass Business School at City University in London. Learn More
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