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Island Reversal

The Island Reversal is a general pattern that can appear at both tops and bottoms, characterized by being isolated by gaps.

GapGapIslandReversal Island: Price isolated by 2 gaps → Reversal

Pattern Details

Category

reversal

Success Rate

74%

Average Move

0%

Duration

1-3 weeks

Pattern Structure

Pattern Structure
Key components that define this chart pattern
  • 1
    Initial gap: Against prior trend
  • 2
    Island area: Isolated trading
  • 3
    Confirmation gap: Reverses prior trend

Trading Rules

Trading Rules
Essential rules for trading this pattern successfully
  • ✓
    Enter position in direction of confirmation gap
  • ✓
    High volume increases reliability
  • ✓
    Target = Height of the island
  • ✓
    Stop loss on opposite side of island
Trading Tips
  • One of the strongest patterns
  • Rare so very valuable
  • Combine with RSI divergence

Statistics

Breakout Statistics
Bullish Breakout52%
Bearish Breakout48%
Performance Metrics
Average Rise+14%
Average Decline-14%
Pullback Rate10%