1-2-3 Formation

Hi all,

I've been reading the information about the 1-2-3 formation - Traderpedia. However, when I follow the 'complex definition' I can't understand how the formations are created with bars 2 and 3 on the same bar. Am I missing something here? The description from the 1-2-3 high is as follows;

The number 2 point of a 1-2-3 high is created when a full correction takes place. Full correction means that as prices move up from the potential number 2 point, there must be a single bar that makes both a higher high and a higher low than the preceding bar or a combination of up to three bars creating both the lower igh and the higher low. The higher high and the higher low may occur in any order. Subsequent to three bars we have congestion. It is possible for both the number 1 and number 2 points to occur on the same bar.

The number 3 point of a 1-2-3 high is created when a full correction takes place. A full correction means that as prices move down from the potential number 3 point, there must be at least a single bar, but not more than two bars that form a lower low and a lower high than the preceding bar. It is possible for both the number 2 and number 3 points to occur on the same bar.

Click to expand...

However, I can't work out how the bottom left formation Image:1-2-3top.jpg - Traderpedia can work if a higher high and higher low is required within 3 bars to make a valid '2' bar.

There ought to be a link there to this thread: http://www.trade2win.com/boards/price-volume/13451-1-2-3-formations-ross-hooks.html

dbphoenix said:

There ought to be a link there to this thread: http://www.trade2win.com/boards/price-volume/13451-1-2-3-formations-ross-hooks.html

Click to expand...

Thanks for the link... I'll take a look now... I'm more concerned about the fact that I put "1-2-3" in the search tool and it DIDN'T show me any matches...

Am I doing something wrong in the search tool? It's set to search 'Forums'

RichieE said:

Hi all,

I've been reading the information about the 1-2-3 formation - Traderpedia. However, when I follow the 'complex definition' I can't understand how the formations are created with bars 2 and 3 on the same bar. Am I missing something here? The description from the 1-2-3 high is as follows;



However, I can't work out how the bottom left formation Image:1-2-3top.jpg - Traderpedia can work if a higher high and higher low is required within 3 bars to make a valid '2' bar.

Click to expand...

No, I'm not convinced with that example, either. My attitude to these strange formations is to give them a miss and look for clearer ones.

I notice that these diagrams are a copy of from the Joe Ross article, but Joe does not put a "3", so he has not accepted confirmation.

Take a look, its on page 3.

http://www.trading-naked.com/library/JoeRossTradingManual_Appendices_269_320LAWOFCHARTS.pdf

Sorry---he does put a "3" I missed it somehow.

Split

Splitlink said:

No, I'm not convinced with that example, either. My attitude to these strange formations is to give them a miss and look for clearer ones.

Click to expand...

Are you talking about clearer 1-2-3 formations or completely different formations?

Splitlink said:

I notice that these diagrams are a copy of from the Joe Ross article, but Joe does not put a "3", so he has not accepted confirmation.

Take a look, its on page 3.

http://www.trading-naked.com/library/JoeRossTradingManual_Appendices_269_320LAWOFCHARTS.pdf

Sorry---he does put a "3" I missed it somehow.

Split

Click to expand...

Thanks for the link. I think I've worked it out... the rules for the number 2 and 3 points are not that clear...

as prices move up from the potential number 2 point, there must be a single bar that makes both a higher high and a higher low than the preceding bar or a combination of up to three bars creating both the higher high and the higher low.

Click to expand...

The key word here is 'as'. You don't have to wait for the bar to complete to fulfill this rule. Therefore the pictures are correct. However one of the pictures does seem to indicate that combination of up to three bars can occur anytime after the 'potential' number 2 point.

However, there appears to be more information in the PDF you referred to about congestion that I still have to read!