Bearish Island Reversal Formation
Description
A Bearish Island Reversal candlestick formation is composed of a minimum of 3 candlesticks. The first is a green up day candle, which occurs during an up move. The second candle creates a window, or gap, after printing. That is, the low of the second candle is higher than the high of the first candle. The third day is then usually a red candle, whose high is also below the low of the second day. That leaves the second day on it's own little "island" above the 2 prints on either side, surrounded by open chart space. This is a bearish island reversal in its simplest form.
The island can be formed by a single candlestick, or it can be formed by multiple candlesticks. Remember above, we mentioned that an island is composed of a MIMIMUM of 3 candles. There can be many more candles that make up the island. What creates the bearish island reversal pattern is the gap down from the first candle, and the gap up to the last candle.