21# 1-2-3-4 Reversal Forex Trading System

A 1-2-3-4 reversal chart pattern is build up of 4 definable points, known as point 1, 2 , 3 and 4. A typical 1-2-3-4 chart pattern is best traded after a strong currency pair up - or downtrend and can be defined by an easy set of trading rules. A trader can confirm the reversal trade using a technical indicator such as DMI or MACD. 

1-2-3-4 Basic Rules for Short Trades 

Point (1): The high in an up trending currency market.
Point (2): A downward correction in the up trend, the lowest bar in the correction before the price moves back up to point (3).
Point (3):  The high in the move up from Point (2) but a failure to make a new higher high(Point 1).
Point (4): Go short 1 pip below point (2)

 

A 1-2-3-4 reversal chart pattern is build up of 4 definable points, known as point 1, 2 , 3 and 4. A typical 1-2-3-4 chart pattern is best traded after a strong currency pair up - or downtrend and can be defined by an easy set of trading rules. A trader can confirm the reversal trade using a technical indicator such as DMI or MACD. 


1-2-3-4 Basic Rules for Short Trades 

Point (1): The high in an up trending currency market.
Point (2): A downward correction in the up trend, the lowest bar in the correction before the price moves back up to point (3).
Point (3):  The high in the move up from Point (2) but a failure to make a new higher high(Point 1).
Point (4): Go short 1 pip below point (2)

1-2-3-4 Up Forex Reversal Strategy using MACD


1) Trade this reversal pattern only after a strong downtrend
2) Place points (1),(2) and (3) on your chart 
3) Place a BUY order 1 pip above (2)
4) Confirm the trade using the MACD indicator (or another); the MACD must signal a buy or in buy mode already. 
5) Target level: Calculate the distance between (2) and (3); if for example the distance between (2) and (3) is 50 pips, than 50 pips is your target level. 
6) Place your stop 1 pip below (3) 

 

1) Trade this reversal pattern only after a strong up trend 
2) Place points (1),(2) and (3) on your chart 
3) Place a SELL order 1 pip below (2)
4) Confirm the trade using the DMI indicator (or another); DMI must signal a sell or in sell mode already. 
5) Target level: Calculate the distance between (2) and (3); if for example the distance between (2) and (3) is 250 pips, than 250 pips is your target level. 
6) Place your stop 1 pip above (3) 

 

 

Write a comment

Comments: 0