1-2-3 – The Foundation of Potential Change in Trend
Part of Art of Chart Reading
If there is only one chart pattern you are allowed to learn, 1-2-3 is the one.
1-2-3 is often a reversal pattern that marks the termination of a trend. The pattern is made up of 3 swings where the first and third swings are pointing to the opposite direction of the current trend. Once the third leg has exceeded the first one the setup is triggered in the direction they are pointing to. If the 1-2-3 setup happens at important support/resistance price level, it often signals a major reversal, or at least a more significant pullback in the making.