The 1-2-3 reversal pattern predicts a turning point at the beginning of a trend.

There are 2 patterns: 1-2-3 reversal at the top and 1-2-3 reversal at the bottom.

1-2-3 reversal pattern at the top

Used to predict a directional change when the market is going up.

  1. The uptrend line is broken (1)
  2. The bulls push the price high but fail to break out from the previous high (2)
  3. Confirm the reversal point at (3)
Place a sell order at the close at the candle (3) and place the stop loss above the candle (2)

1-2-3 reversal pattern at the bottom

Used to predict a turnaround point in a bear market.

  1. The downtrend line is broken (1)
  2. The bears push the price low but not cross the previous bottom (2)
  3. Confirm the reversal point at (3)
Place a buy order at the close of the candle (3) and place the stop loss below the candle (2)

Example of a 1-2-3 reversal pattern strategy at the top of GBPJPY pair


Place a sell order at the close of the candle (3) at 156.37. Place stop loss at “above right shoulder” at candlestick (2). GBPJPY dropped 250 pips right after confirming the reversal point.

Example of a 1-2-3 reversal pattern strategy at the bottom of the XAUUSD pair


Place a buy order now at closing price breaking the blue resistance. Place your stop loss below the candle (3).