Subscribe to RSS feeds Bulkowski Blog via RSS

Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

Support this site! Clicking the links (below) takes you to Amazon.com. If you buy ANYTHING, they pay for the referral.

Picture of the head's law.
Kindle
Paperback
Nook
Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
Encyclopedia of Chart Patterns 2nd Edition book.

Bulkowski's Long Island

Class Elliott Wave Fundamentals Psychology Quiz Research Setups Software Tutorials More...
Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 03/27/2017
20,551 -45.74 -0.2%
8,935 6.33 0.1%
702 -3.50 -0.5%
5,840 11.63 0.2%
2,342 -2.39 -0.1%
YTD
4.0%
-1.2%
6.5%
8.5%
4.6%
Tom's Targets    Overview: 03/14/2017
20,100 or 21,250 by 04/15/2017
8,500 or 9,500 by 04/15/2017
675 or 715 by 04/01/2017
5,950 or 5,650 by 04/15/2017
2,275 or 2,425 by 04/15/2017
Mutt Losers: None YTD
Mutt Winners: None YTD

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 480 to 495. That chapter gives a complete review of the chart pattern, including tour, identification guidelines, focus on failures, performance statistics, trading tactics, and sample trade. Below is just a sliver of the information contained in the book.

This is not a new pattern, but one in which I coined the name to distinguish it from island reversals. With long islands, the gaps do not align. Long islands are a continuation pattern that perform best in all markets except a bull market.

Long island chart pattern
Long Island Chart Pattern Example

 

Important Bull Market Results for Long Island

Overall performance rank for up/down breakouts (1 is best): 15 out of 23; 6 out of 21
Break even failure rate for up/down breakouts: 11%; 5%
Average rise/decline: 31%; 22%
Throwback/pullback rate: 67%; 54%
Percentage meeting price target for up/down breakouts: 82%; 78%

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Long Island Identification Guidelines

CharacteristicDiscussion
Price trendPrice can trend in any direction leading to the island.
ShapeNon-aligned gaps separate a price island from the mainland.
GapsTwo gaps that setoff the long island do not share the same price. Those that do share the same price form island reversals.
Wide gapsLook for gaps at least $1 wide.
LengthLook for islands shorter than 4 months.
Volume shapeU-shaped because of high volume surrounding each gap.
SequenceIslands tend to get shorter as they appear in a price trend. Thus, they can signal a trend change.
BreakoutThe second gap marks the breakout day.
Top of page   More

Long Island Trading Tips

Trading TacticExplanation
Measure ruleCompute the height from the highest peak (point A in the Measure Rule figure to the right) to lowest valley in the island (B) and divide by two then multiply it by the above “percentage meeting price target.” Add the height to (upward breakouts) or subtract it from (downward breakouts) the closing price the day before the second gap. The result is the target price, C.
ShortAvoid short islands that appear well into the trend. They may signal a coming trend change.
Yearly middleAvoid long islands that appear in the middle of the yearly price range. They perform worst.
HeightTall islands perform better than short ones.
Height, widthLong islands both tall and wide perform best (upward breakouts); tall and narrow perform best after a downward breakout.
Volume shapeLong islands with dome-shaped volume outperform.
Throwbacks and pullbacksThrowbacks and pullbacks hurt post breakout performance.
Long island chart pattern measure rule
The Measure Rule
Top of page   More

Long Island Example

Long island chart pattern example

The above figure shows examples of long island chart patterns. The first begins with a breakaway gap at point C and ends the next day with an exhaustion gap at D. The next long island begins at A and completes at B.

-- Thomas Bulkowski

Top of page   More  

See Also

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Press any key...no, no, no, NOT THAT ONE!