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A effective technical analysis tool that traders employ to locate possible market reversal points is the 123 pattern Forex indicator. The 123 pattern indicator is a potent tool that can detect the 1-2-3 pattern on the chart automatically and track its formation in real time.
For traders hoping to make money from trend reversals in any instrument, including currency pairs, the stock market, gold, etc., this indication is useful. The indicator shows points 1, 2, and 3 on the chart and is straightforward and simple to apply. It also has the capacity to identify potential levels of profit-taking, such as Fibonacci levels or Fibo extension, and it includes “Awesome Profit Zones” that have a high probability of success.
When a pattern is detected, it also produces audio and text alerts and has tools for emailing and pushing notifications to mobile devices.
Any Forex currency pair as well as other assets, including commodities, cryptocurrencies, binary options, stock markets, indices, etc., can be traded with this 123 Pattern Finder Indicator. Additionally, you may apply it to any time window that works best for you, from 1-minute charts to monthly charts.
What is 123 Pattern
A chart pattern called the 123 pattern is employed in technical analysis to spot probable market reversal points. It consists of a three-point design with a
- Point 1 – High
- Point 2 – Lower intermediate
- Point 3 – Higher high
When point 3 is higher than point 1 and point 2 is positioned between point 1 and point 3, the pattern is deemed complete.
- A bullish 123 pattern is formed when the price trends downward and point 2 is a local low. This pattern is considered a bullish reversal pattern.
- A bearish 123 pattern is formed when the price is trending upward and point 2 is a local high, and this pattern is considered a bearish reversal pattern.
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How it used in Forex Trading
The 123 patterns are a technical analysis tool used in forex trading to spot probable reversal points in currency pairs. By looking for a bullish 123 pattern when the currency pair is heading downward and a bearish 123 pattern when the currency pair is trending upward, traders can use this pattern to spot potential buying and selling opportunities.
A bullish 123 pattern may be interpreted by traders as a tip to buy a particular currency pair since it can show that the trend is changing from bearish to bullish. Similarly, traders may interpret the appearance of a bearish 123 pattern as a signal to sell a currency pair because it could mean that the trend is changing from bullish to negative.
The 123 patterns can be used by traders to determine stop-loss and take-profit levels. For instance, if a bullish 123 pattern is found, the trader may place their take-profit level at point 3 and their take-loss level below the bottom of point 2.
To make a more educated choice, it is advised to use the 123 Pattern Finder Indicator in conjunction with other technical analysis tools like trend lines, chart patterns, support and resistance, and other indicators. This is because the indicator is not a guarantee of a trend reversal.
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Features
- The 123 patterns might show a trend or a reversal.
- The M5 to MN instruments and periods are suitable for the 123 pattern.
- The price movement after the pattern is broken is projected to be bigger the more bars make up the pattern (from point 1 to point 3).
- It intensifies the pattern if point 1 has a pin-bar (also known as a Hammer or Shooting Star in candlestick analysis).
- Only searching for the pattern during the European and American sessions is advised for intraday trading.
- When a bar breaches the line at the level of point 2, the trading algorithm deems a pattern to have been initiated. The bar cannot simply touch or breach the line; it must close on that side. The parameter “Method for pattern triggering” allows the indicator to also take into account a straightforward touch of the line from point 2 as pattern triggering.
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