The basis of classical technical analysis is the search for patterns for trend continuation and reversal.
There are many different variations of patterns. What if we can make it easier to find some of them?
What pattern do you see in the picture above? Double top, triple top, head and shoulders, dragon or whatever?
In fact, most of the reversal patterns of technical analysis are 123 after the extreme.
And if the trend has continued, then this continuation pattern is a flag, the Baskervilles dog, or another name.
You see how convenient everything is in technical analysis.
To search for similar patterns (123 after the extreme), the UPD1 Semaphore 123 Dashboard indicator will help us.
Visual 123 can be customized in different ways. An example is in the screenshot.
The built-in dashboard will help us find 123 patterns in time. It signals at the 2nd bar.
The further from the pattern, the larger the number in the cell. By clicking on the cells, we switch between currencies.
If the 123 pattern itself breaks the trend line and the previous fractal, then we can enter after the formation of 123 immediately.
An amplifying signal will be a test of the trend line from the reverse side. Don't be greedy and set your first take profit at 2/3 of wave 1-2
Since the indicator (like any Zig-Zag) can be repaint, we are looking for only the best 123 patterns.
The price should exit the channel (or break the trend line). The entry point is approximately at the level of point 3.
If you have found the correct 123 pattern, then be sure that the price will touch the safe take.
Example 1. We see a breakout of the trendline and a test from the reverse side. I wouldn't go in.
But on the test of point 3, there is a good entry (on Pin-Bar) with an understandable take profit.
All potential entry points and all 123 before the trendline breakout should be ignored.
Example 2. You see three patterns, but only one of them is understandable by entry and take-profit (far right).
Don't chase the number of deals and strive for quality.
Example 3. We could enter a trade immediately after 123 completes.
And then we had two more restarts. Entry on the test of point 3.
The first arrow is not a very good entry, because against an impulse candle.
But on the next touch of the pin bar, we get a good entry point.
When the icon is colored yellow, we see a double bottom / top pattern.
This is an additional trigger for entering a position.
Also, the amplifying signal at the entrance will be the test of the round / volume / combo levels and others.
Of all the 123 found, choose the best, the most beautiful, and skip most of the rest without looking, do not chase the number.
In such a case, practice is always necessary. Collect and study the statistics of your own entry points (at least 100).
Pay attention to entry times, icon colors, channels / trending, ABC height and swing, and the length and slope of the previous move. I am sure you will understand the patterns.
Have a nice trade!
Control risks using the utility UPD1 Trade Panel Friendly MT4
UPD1 Semaphore 123 Dashboard MT4
UPD1 Semaphore 123 Dashboard MT5
