higher low

The entire 1-2-3 high or low is nullified when any price bar moves prices equal to or beyond the number 1 point. Note: The #3 point does not come down as low as the #1 point in a uptrend, or as high as the #1 point in a downtrend.

We set a mental or computer alert, or both, to warn us of an impending breakout of these key points. We will not enter a trade if prices gap over our entry price. A gap occurs when prices jump from where they previously finished to where they currently begin. A gap can occur when prices are moving up or when prices are moving down. We will enter it only if the market trades through our entry price.

1-2-3 highs and lows come only at market turning points that are, in effect, major or intermediate highs or lows. We look for 1-2-3 lows when a market seems to be making a low, or has reached a 1/3 or greater retracement of prices from a low. We look for 1-2-3 highs when a market appears to be making a high, or has reached a 1/3 or greater retracement of prices from a high.

Exact entry will always be at or prior to the actual breakout taking place. I will cover more of that concept when we discuss the Trader's Trick entry.

The next figure illustrates the 1-2-3 formation in action.

Budgeting Tips For Families

Budgeting Tips For Families

Learning all about budgeting strategies for busy families can have amazing benefits for your life and finances. Learn financial control with less effort and more results.

Get My Free Ebook

Post a comment