123 Reversal
The 123 reversal strategy is based on these 2 simple patterns. (There are other enhancements to this pattern which take into account the price action leading up to this.)
Sell Signal
Rules for the sell signal:
- Bar 2 has a higher high and higher low than both of bars 1 and 3.
- Bar 1 is a green bar (close higher than open).
- Bar 3 is a red bar.
Buy Signal
Rules for the buy signal:
- Bar 2 has a lower low and lower high than both of bars 1 and 3.
- Bar 1 is red.
- Bar 2 is green.
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