With the above title, you will wonder what is the Long Island price pattern? Why is it so effective in the Forex market and how to trade to get the desired profit? Let’s read this article to answer these questions.
What is the Long Island pattern?
Long Island is a type of continuation price pattern. It means if the trend before the pattern is bullish, then the price will continue to go like that and vice versa.
Bullish Long Island
The Bullish Long Island pattern occurs when the price makes bullish gaps (gap up) and there are periods of accumulation above the gap. After the accumulation, the price is expected to move higher.
Bearish Long Island
The Bearish Long Island pattern occurs when price makes bearish gaps (gap down) and there are periods of accumulation below those gaps. After the end of the accumulation, investors expect the price to fall further.
Important features to note
- High islands are more efficient than low islands.
- For Bullish Long Island, high and wide islands are more effective.
- For Bearish Long Island, high and narrow islands are more effective.
- The gap before and after the accumulation period is as large as possible.
- Before the accumulation phase, the clearer the trend, the more effective it is.
Meaning
When there is a sideways segment with a narrow range, it is preceded by an easily recognizable bullish/bearish trend. The appearance of Gap is like a strong push from investors who follow the previous trend. When the bears fail to push the price lower, the market starts to accumulate, waiting for the crowd on the outside to decide which side will win. The second gap shows dominance as the price increases/decreases strongly to continue the initial trend.
How to trade with the Long Island pattern effectively
With this continuation price pattern, we will place an order based on the previous trend and expect the price to go even further. When there are 2 consecutive gaps, the trend is firmly consolidated.
After the Bullish Long Island is successfully confirmed, we will enter a bullish order when the price retraces and touches the gap up.
Stop loss will be the nearest bottom of the accumulation area.
Take Profit will be the distance from the lowest bottom to the second gap up.
As for the Bearish Long Island pattern, it is best to open a bearish order when the price retraces to the Gap Down segment when the pattern is confirmed.
Stop loss will be the nearest top during the sideways phase.
Take Profit should be set with the distance equivalent to the highest peak to the second gap down.
Conclusion
In every article, I remind you that there are always risks no matter what market you trade. Especially in the Forex market, up to 95% of traders lose money because of trading on emotions. So be careful and test the effectiveness of the strategy on a Demo account before trading for real.
Join the Olymp Trade Club Signal Group: https://t.me/olymptradeclub19
General Risk Notification: trading on the Olymp Trade platform involves high-risk investment. Do not invest funds that you are not prepared to lose. Before you start, we advise that you become familiar with the rules and conditions of trading outlined on our site. Any examples, tips, strategies and instructions on the site do not constitute trading recommendations and are not legally binding. Olymp Trade is a trading platform which operates online. Traders make their decisions independently and this company does not assume responsibility for them. The service contract is concluded in the territory of the sovereign state of Saint Vincent and the Grenadines. The services of the company are provided in the territory of the sovereign state of Saint Vincent and the Grenadines.
