Take the rise as an example:
1. Price falls below the trend line
2. The price rises again and fails to break through a new high, or falls below the previous high after breaking through (2B)
3. The price continues to fall and falls below the previous low.
3 steps. If 2 conditions appear, the trend has changed. If 3 conditions appear, the trend change is confirmed. The 123 rule has a higher winning rate. The disadvantage is that when condition 3 occurs, the price has often dropped a lot.
At this time, you can focus on the second step. If 2B occurs, that is, after breaking through the previous high, it falls back below the previous high. With this single step, you can bet on the trend reversal, and at this time, the price has just started to fall, and the amplitude can be expected.
What needs to be noted here is that in step 2, if the price rises and breaks through the previous high without a correction, it is an opportunity to enter the market and do long according to the "normal callback breakthrough" introduced by Livermore in Chapter 2 of "Trading Techniques of Master Stock Operators" (Image: Interested friends can read my interpretation of this book that I am serializing)
In fact, we can also simply regard the above skills as two situations: "breakthrough failure and breakthrough success".
It can be seen that even the same trading technique has pros and cons. This is the "uncertainty" of the market.
What do you think about this? Welcome to leave a message and discuss in the comment area