When a candlestick drifts away from an established downtrend, gaps down, and then gaps back up into an uptrend, it becomes an island—a Bullish Island Reversal, to be exact. The further the candlestick drifts, the stronger the pattern’s implications. Although these islands aren’t very common, they are interesting and important nevertheless. In fact, the insight they provide could be pivotal as you decide your next trading move. To help you get started on your quest to find an Island Reversal, today we’re discussing the formation and meaning of the bullish variety.
Continue Reading

No man is an island (according to John Dunne, that is), but some candlestick patterns are. Separated from the rest of the price action, completely broken off and drifting, a Bearish Island Reversal pattern is a gap up in a bull trend. When the signal finally gaps back down and enters the price action again, the trend reverses and becomes bearish. This may not be an island in the sun, but it’s certainly worthy of your attention. To help you spot this Island Reversal on the map, let’s discuss its landmarks (i.e., what it looks like) and its impact on the environment (i.e., what it means for traders). 
Continue Reading