Concept
Island Reversal
Island Reversal, also known as island gap pair, is a Chart & Candlestick Patterns concept. The Library holds 1 implementations, each one a working definition you can pull into Quant.
Top Island Reversal indicators
1 total
What is an Island Reversal?
An island reversal is a cluster of price bars isolated from the surrounding trend by two gaps in opposite directions. In the topping version, price gaps up after an advance, trades for one or more bars at the elevated level, then gaps down through roughly the same price span; the bars left stranded above both gaps form the island. The bottoming version mirrors it: a gap down, a stall, then a breakaway gap back up. What makes the pattern is that the two gaps overlap in price, so the island's entire range sits detached from everything traded before and after it.
The signal logic is positional. Everyone who bought inside a topping island is underwater the moment the second gap prints, with no overlapping trade to exit into, and their liquidation pressure feeds the new direction. That is why the pattern is read as a reversal: it marks a pocket of trapped participants rather than a particular candle shape.
How traders use it
- As a reversal signal after an extended move: entry on or after the second gap, with the stop beyond the island's extreme high or low.
- As an invalidation rule: if price re-enters the island by closing the second gap, the trapped-trader logic is gone and the pattern is treated as failed. Gap fill behavior is the tell to watch.
- As a session-market pattern: it needs true gaps, so it appears mostly on daily stock and futures charts and is rare in markets that trade nearly around the clock.
Related concepts · Reversal chart patterns
Concept family
Chart & Candlestick Patterns
84 concepts mapped · 46 in the Library
Island Reversal FAQ
What invalidates an island reversal?
Price trading back into the island's range, which means the second gap has filled. The pattern's logic rests on participants being stranded with no overlapping prices to exit into; once the gap closes they can exit near break-even, and the imbalance the pattern implied is neutralized. Most traders also discount islands whose second gap fills within a few bars.
Do island reversals appear in forex or crypto?
Rarely. The pattern requires two genuine gaps, and markets that trade almost continuously seldom gap outside weekends or exchange outages. It is primarily a daily-chart pattern in stocks and session-based futures. On intraday charts, opening gaps can create island-like structures, but the isolated cluster is usually too brief to carry the same weight.
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