The 123 rule was proposed by Victor Sperandeo in his classic work (Market Speculation Principles) as an important method to help us identify trend reversals, especially applicable to the cryptocurrency market. Below, I will explain this rule in an easy-to-understand way to help you better understand how to apply it in the crypto market.
What is the 123 rule?
The 123 rule is used to help us identify changes in market trends. This rule primarily confirms the possibility of a trend reversal by observing price movements. Specifically, the 123 rule has three key points, and we should focus on at least two of them. Only when both conditions are met can we assess the potential change in trend.