Island Reversal (Bottom) Chart Pattern — How to Spot and Trade It

A gap down, a stranded consolidation, then a gap up — sellers left behind.

In plain words

Sellers row out to an island in a storm — and the tide strands them there.

What the classic books say

The Island Reversal (Bottom) is a reversal pattern with reference reliability Medium and illustrative behaviour of ~65-70% follow-through (the kind of statistics catalogued in Bulkowski's encyclopedic pattern studies and Murphy's technical-analysis classic). Powerful after capitulation declines.

Level by level

Beginner

A jump down, a pause, a jump up — the sellers below are now stuck.

Intermediate

Twin gaps isolate an accumulation zone; trapped shorts chase the recovery.

Advanced

Volume on the upside gap is the conviction tell.

Trade plan (educational template)

• Entry: On the upside gap or its first successful retest.
• Stop-loss: Below the island's low.
• Target: Island height projected up, or to the origin of the first gap.
• Check the numbers with the Risk-Reward calculator before any entry.

Common beginner mistakes

• Fading the second gap

Practise it now

• ▶ Draw the Island Reversal (Bottom) with live trendlines and a ghost forecast
• 📖 Full lesson in the Learning Hub

_Educational content only — not financial advice. Historical behaviour never guarantees future results._