123 Trading Pattern

123 pullback formation is made up of 3 price levels. You can use this trading pattern after bullish or bearish trend. We also can use other supporting forex indicator to confirm our trading position.

Here are the basic system for open sell trading

1. High peak in a bullish trend
2. Bearish reversal movement
3. Bullish movement but fail to break the previous high

Then open short trading position when the market price break below the point 2.

Open buy trading

1. Low swing in bearish trend
2. Bullish reversal movement
3. Bearish movement but fail to break the previous low

Then we can open long trading position when the market price break above the point 2.

I suggest you to use this system only after a strong trend movement. Set your 123 levels on your trading chart and then place our entry order 1 pips below 2nd low for sell trading position and 1 pips above 2nd high for long trading position. Use Moving average convergence divergence MACD forex indicator with default setting for your confirmation trade. The MACD must give the same signal with 123 pattern. Or you can use ADX trend indicator for confirmation indicator. For profit target you can use risk and reward ratio at least 1:2 risk:ratio. Place your stop loss above or below point 3.