Must-read for newcomers: 123 strategy, a simple and effective trend reversal signal in trading.
The 123 pattern is a classic technical analysis pattern in the financial market. Its core is to identify trend reversals or continuations through three key high and low price points. Due to its clear structure and definite signals, it has become a commonly used analytical tool for both novice and experienced traders, applicable to all trading markets with candlestick charts, including stocks, futures, and cryptocurrencies.
1. Core definition of the 123 pattern: three key points outline the trend reversal.
The essence of the 123 pattern is the 'turning signal after trend exhaustion,' consisting of three consecutive price nodes (highs or lows). The core logic is: the existing trend can no longer create new highs/lows, followed by a breakthrough of key positions, confirming the start of a reversal trend.