An Island Reversal is a significant chart pattern characterised by a cluster of candlesticks that are isolated from the surrounding price action by two price gaps one gap in the direction of the prevailing trend (into the island) and one gap in the opposite direction (out of the island), leaving the cluster of candles stranded between the two. A Bullish Island Reversal forms at the bottom of a downtrend and signals a potential major reversal upward, while a Bearish Island Reversal forms at a top and signals a reversal downward. Island reversals are relatively rare but are considered high-conviction reversal signals when they do occur, particularly when accompanied by strong volume on the gap out of the island.
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