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VA Island Gap

VA GAP observations

The concept of an Island gap is more common when observing daily VA’s

First Observation was 2/9/06 when market closed 5 points below that day’s VA. The next day’s O was @ PDC, and market tested down from OR in the direction of the close first, almost 10 points. The same island gap was filled 2 days later on a powerful T day up. The trend continued for at least 2 days.

Postulating that island gaps formed by momentum up one day1 and a powerful reversal the next day 2 lead to a strong continuation trade following the Open of the day 3.
Postulating that when Island Gap quickly filled within 2 days of its creation , that gap fill is evidence of overwhelming buying or selling power that will continue, a multiple day rally or sell off.
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