Island Reversal (Top)
Definition
Price gaps up, trades on an 'island', then gaps down — leaving buyers stranded.
Psychology
A jump up, a pause, a jump down — everyone who bought on the island is trapped.
Real-life analogy
💡 A day-trip to an island that ends with the last ferry leaving without warning.
Expected direction
down
Entry / Stop / Target
Entry: On the downside gap (or its first retest that fails). · Stop: Above the island's high. · Target: Measured from the island's height, or to the origin of the first gap.
Historical behaviour
More common after extended rallies with news spikes.
Illustrative success rate
~65-70% follow-through · Medium reliability
Common beginner mistakes
- • Ignoring the gap-fill risk on the retest
Quick quiz — did you understand?
1. Is the Island Reversal (Top) generally considered bullish, bearish, or neutral?
2. After a confirmed Island Reversal (Top), the expected direction is usually:
3. Which is a common beginner mistake with the Island Reversal (Top)?
Educational and probability-based analysis only. This is not financial advice and not a prediction of real market outcomes.