What is an island reversal price pattern?

This island reversal price pattern occurs when two or more gaps isolate a cluster of trading days. The pattern usually implies reversal and can apply to a bullish or bearish change. Island reversals changing from upward trending prices (bullish) to downward trending prices (bearish) are much more common than the opposite.

What are the characteristics of island reversal?

The island reversal formation has five standout characteristics: A lengthy trend leading into the pattern. An initial price gap. A cluster of price periods that tend to trade within a definable range. A pattern of increased volume near the gaps and during the island compared to the preceding trend.

What is an island reversal chart pattern?

One such chart pattern is the island reversal. An island reversal is a chart pattern that consists of a group of barsc that are separated by gaps on either side. As its name suggests, the island reversal is a reversal pattern which shows that the current trend soon is to be replaced by a trend in the opposite direction.