Definition of '123 Reversal'
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 (close is lower than open).
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 (close is lower than open).
- Bar 3 is green (close is higher than open).
In 2006 the trading team at MyPivots back tested this trading strategy against the E-mini S&P500 on a number of different time frames and concluded that it does not work in this market on the time frames that they tested. Time frames used were common ones such as 1, 3, 5, 15, 30, 60 minutes.
Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.
Is this definition wrong? Let us know by posting to the forum and we will correct it.