1-2-3 Forex Trading Patterns Strategy

The 1-2-3 Forex trading patterns strategy is an important trading system that takes advantage of a powerful 1 2 3 step buy/sell trade setup in the currency market.

It becomes easy to spot such setup patterns using the naked eyes when you’re an experienced trader.

However, the 1-2-3 Forex trading patterns strategy is built on price action and a normal currency market structure that any trader should grasp in no time.

The strategy is designed to scan the market for a rebound, bottom, top, a re-test or a trend correction.

Considering how difficult it is to precisely know when the market trends and swings, the 1-2-3 forex-patterns strategy is key to spotting such price maneuvers.

Chart Setup

MetaTrader4 Indicators: 123-forex-patterns.ex4 (Default Setting), colored-bands-signals.ex4 (Inputs Variable Modified; Length=24, CalcArrows=ArrowsOFF, Colors Modified; #1=Yellow), RSISignal.ex4 (Default Setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week

Recommended Trading Sessions: Any

Currency Pairs: Any pair (majors, crosses, exotics)

Download

Download the 1-2-3 forex-patterns strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a bullish trade if the following indicator or chart pattern gets put on display:

  1. If price opens and closes above the upper dodger blue line of the 123-forex-patterns Metatrader 4 forex indicator (see Fig. 1.0), the general market sentiment is said to be bullish, and as such a trigger to go long on the designated forex pair will suffice.
  2. If the upper band of the colored-bands-signals indicator turns yellow as depicted on Fig. 1.0, price is said to be pressured higher i.e. a trigger to buy the designated fx pair.
  3. If the RSISignal Metatrader 4 custom indicator displays green histograms that are positioned above the 0.00 center level (refer to Fig. 1.0), bullish pressures is said to be building up, hence a signal to go long on the desired pair is appropriate.

Stop Loss for Buy Entry: Place stop loss below the most recent swing low price.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit from all trades if the following rules or conditions takes precedence:

  1. If price opens and closes below the lower orange red support level of the 123-forex-patterns indicator during a bullish trend, it is a signal to exit or take profit at once.
  2. If upper band of the colored-bands-signals indicator changes to magenta while a bullish trend is running (check Fig. 1.0), bulls power is said to be weaning, hence an exit or take profit will suffice.
  3. If the RSISignal indicator pops up a maroon histogram that gets aligned below the 0.00 center line while a bullish signal is ongoing, it is a trigger to exit or take profit at once.

Sell Entry Rules

Go short if the following setups gets displayed successfully on the activity chart:

  1. If price opens and closes below the orange red lower line of the 123-forex-patterns forex indicator as depicted on Fig. 1.1, the overall market sentiment is said to be bearish, and as such a trigger to go short on the desired currency pair.
  2. If the upper band of the colored-bands-signals indicator turns magenta as illustrated on Fig. 1.1, price is said to be driven lower i.e. a trigger to go short on the currency pair of focus.
  3. If the RSISignal Metatrader 4 custom indicator displays maroon/fire brick histograms that are placed below the 0.00 center level as exemplified on Fig. 1.1, bearish pressures is said to be building up, hence a signal to go short on the selected pair is apt.

Stop Loss for Sell Entry: Place stop loss above the most recent swing high price.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If price opens and closes above the upper dodger blue resistance level of the 123-forex-patterns indicator while a bearish trend is ongoing, it is a signal to exit or take profit forthwith.
  2. If upper band of the colored-bands-signals indicator reverts to yellow during a bearish trend as depicted on Fig. 1.1, bears power is said to be halting, hence an exit or take profit will do.
  3. If the RSISignal indicator pops up a green histogram that gets aligned above the 0.00 center line while a bearish signal is continuing, it is a trigger to exit or take profit immediately.

Sell Trade Example

Fig. 1.1

Free Download

Download the 1-2-3 forex-patterns strategy

About The Trading Indicators

The 123-forex-patterns.ex4 indicator is a technical tool that plots plausible support and resistance price level during trading.

The colored-bands-signals.ex4 is a channel indicator that deploys four types of moving averages (simple, exponential, smoothed & linear weighted) in sorting the trend characteristics of price.

The RSISignal.ex4 custom indicator is built on the parent indicator (RSI) to define overbought/oversold price conditions.

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