1-2-3-4 Forex Reversal Trading Strategy


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) ...

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How is this different than Fibonacci?
Did he mention Fibonacci? No he described the break in the trend, the 123 method and added a 4.
After the reversal you may like to use the fib to guess how far down it will fall.