Island Reversal: A Strong Reversal Signal
What is the Island Reversal Pattern?
The Island Reversal is a multi-candle pattern that signals a sharp reversal in trend with gaps on both sides.
Formation – Gap Isolation
A group of candles gets isolated between a gap down and a gap up, forming an “island” on the chart.
Market Psychology Behind the Pattern
The first gap traps traders in the old trend, while the second gap forces a sudden shift in sentiment.
What Does It Indicate?
The pattern signals a strong reversal as market participants quickly change direction.
Confirmation & Volume
Traders look for strong follow-through after the second gap, while higher volume confirms the reversal strength.
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