FOREX 1-2-3 pattern
1-2-3 pattern - is a common reversal formation in the forex market, which has a high probability of concluding a profitable trade, and therefore often used Most of forex traders to enter and exit the market out of him, is found in all timeframes and all currency pairs, including the futures market.
This pattern, in spite of its simplicity, allows the trader to find a surprisingly precise levels for entry and exit.
Examples 1-2-3 pattern, you can see in the picture below ( 1-2-3 Down - a pattern directed down and 1-2-3 Up - ascending pattern):
Basic rules for transactions on 1-2-3 pattern:
1) after the formation of the points 1, 2 and 3 - Set aside Buy Stop order above (for sale) or Sell stop - below (for sale) point 2 . Preference should be given patterns, where the point 3, rasspolozhena at a distance from 23.6% to 50% (maximum 61.8%) of the Fibonacci deferred from point 1 to point 2.
2) Stop-Loss place to point 1. As we move towards the price of the transaction, stop-loss can be carried beyond the point 3. You can initially and put a stop loss under point 3, if Point 3 bounced from 50% or 61.8% Fibonacci between 1-2.
3) The minimum take-profit is the distance 1 - 2, pending in the direction of price movement from point 3. Maximum take-profit can be calculated using Fibonacci extensions. Ie it may be equal to the distance 1.68 from 1-2, a distance of 2 and 2.68, etc.
Alternatively, you can enter, for example, 2-3 of the transaction equal to the lot and fixed take-profit at a distance of 1 from 1-2, 1.68 and 2.68 from 1-2 from 1-2. At the same time when the profit on the minimum goal, the rest of the transaction can be transferred to the breakeven point and wait for further developments (if you wish, you can use a trailing stop) if the price moves on - fix next profit target is not moving - stop-loss trigger at breakeven.
example, see Figure 1:
For more aggressive traders, market entry can be done on the breakdown of trend line, after the formation of point 3 - Figure 2:
Figure 3 - Example of fixation on Fibonacci extension TP:
where, Sell and Sell a 2 - possible entry points into the market for sale, TP 1, TP2, TP3 - options to profit from pattern 1-2-3.