Price action - pattern 1-2-3

I really like this model price action. I often use it in my trading pattern .

Conditions:

  1. breakout of the trend line
  2. lower top in an uptrend, or higher bottom in a downtrend
  3. price pass below the previous bottom in an uptrend, or above the previous top in a downtrend

At the point 3 reversal is confirmed. I put a stop above / below the point 2 or 3 (if the difference is small).

I enter at point X according to the readings of my indicator. For more conservative trading, the entry is made at the point 3.

Pattern 1-2-3 – This is a reversal pattern, which can be found in all time slots, From intraday to long-term. It is characterized by three distinct movements:

  • The First Wave (1) – This is a strong uptrend or downtrend, which is interrupted by a rebound. This pullback is usually less than the previous trend movement.
  • Second wave (2) – This is a continuation of the original trend, But it is weaker than the first wave.
  • The Third Wave (3) – This is a reversal movement, which breaks the trend and signals that, that a new trend is likely to form.

Pattern 1-2-3 is a reliable indicator of a potential trend reversal, But it is important to wait for confirmation before taking any trading action. This confirmation could come in the form of a breakout of a support or resistance level or a reversal indicator, such as moving average crossovers.

Here are some tips for trading the pattern 1-2-3:

  • Wait, until the third wave is formed, Before you make a trade. The Third Wave – This is the most important part of the pattern, And it confirms the trend reversal.
  • Set the Stop Loss Lower (For Long Trades) or higher (For Short Trades) the low of the third wave. This will protect you from losses, If the price reverses in the direction of the previous trend.
  • Take the profits, when the price reaches the high of the pattern 1-2-3 (For Long Trades) or the low of the pattern (For Short Trades). This is a conservative approach, But it will help you avoid falling into the trap of undulating motion.
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Pattern 1-2-3 – This is a universal pattern, which can be used to trade various markets, including shares, Forex & Commodities. This is a relatively simple pattern for identification, But it can be very effective in predicting trend reversals.

Here are some examples of the pattern 1-2-3 In action:

  • Stock Market: IN 2008 year stock market Survived the pattern 1-2-3, which signaled the end of a bull market.
  • Currency market: IN 2016 The EUR/USD currency pair has experienced a pattern 1-2-3, which signaled the end of the euro's bull run against the dollar.
  • Commodities Market: IN 2014 year, the oil market has experienced a pattern of 1-2-3, which signaled the end of the oil boom.

These are just a few examples, And there are many other cases of the pattern 1-2-3 in financial markets. If you are interested in exploring this pattern in more detail, I recommend doing your own research or taking a course on price trading.

Pattern Explanation

Pattern 1-2-3 arises, when buyers or sellers gain power and then lose it. The First Wave (1) represents the initial momentum of the trend. Rollback (2) is a correction of this impulse. The Third Wave (3) represents a reversal impulse, which breaks the trend and signals that, that a new trend is likely to take shape.

Pattern Confirmation

Pattern 1-2-3 is more reliable, if it is confirmed by other technical indicators. For example, If the third wave (3) breaks through a support or resistance level, This could be a sign of that, that the trend reversal is real.

Pattern trading

Pattern trading 1-2-3 Can be profitable, But it's important to be careful. Always Use a Stop Loss, to protect your losses, and don't trade this pattern, if it doesn't meet your trading criteria.

Here are some tips for trading the pattern 1-2-3:

  • Wait, until the third wave is formed, Before you make a trade. The Third Wave – This is the most important part of the pattern, And it confirms the trend reversal.
  • Set the Stop Loss Lower (For Long Trades) or higher (For Short Trades) the low of the third wave. This will protect you from losses, If the price reverses in the direction of the previous trend.
  • **Take the profits, when the price reaches the high of the pattern 1-2-3 (For Length
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