Trends/Reversal patterns

Island reversal

A cluster of bars cut off from the rest by a gap on each side, like an island.

Reversal patternsBest on 3M, 6MAlso called island top, island bottom

Illustration of the island reversal shape. It is a sketch, not real price data.

What it shows

An island reversal has two gaps. Price gaps up away from the earlier bars, trades in a small cluster, then gaps down back to where it started. The cluster sits alone on the chart.

The gaps need to be at about the same price level for it to count as an island.

How we find it

The same code that draws it on your chart follows these steps, with the same result every time.

Find a gap in one direction.
Find a gap in the opposite direction within 20 bars.
Require both gaps to be at least 1% and to overlap in price.
Mark the bars between them as the island.

Starting values: Minimum gap size 1.0%; Maximum island length 20 bars. These are proposed and will be tuned on real price data before launch.

How to read it

The gold zones are the two gaps.
The bars between them form the island.
The overlap of the gaps means price came back to where it left.

Status labels you may see

Label	What it means
Island formed	Both gaps are present.
Gap open	The second gap has not been filled.
Gaps filled	Price has traded back through both gaps.

What cancels it

There is no cancel rule. It is a fact about two gaps in the data.

What traders check next

What news caused each gap.
Volume on each gap day.
Whether the second gap filled.

Limits

Rare.
Gap size is a rule choice.
Gaps are common after news and often unrelated to price patterns.

Try it in forecastviz

Open any ticker and choose Reversal patterns → Island reversal in the left menu.
Switch between 3M, 6M to see how the picture changes.
Compare with Gap levels and Exhaustion gap on the same chart.

Open on a ticker

Questions

Why is it called an island?

The cluster is isolated by gaps like an island in the sea.

Does it work on weekly charts?

Rarely, because weekly bars hide most gaps.