Here are the tips, brothers, I have tried it and found it is really good!
🟦Three trends about the 123+2B theory:
Trend 1: Main trend, which can last for several years;
Trend 2: Correction trend, weeks or months;
Trend 3: Short-term fluctuations, from days to weeks.
🟦The three main stages of the 123+2B theory:
Stage 1: Greed or fear emotions;
Phase 2: Reflecting the actual fundamental situation;
Stage 3: Fear or greed emotions.
🟦Three axioms about the 123+2B theory:
Axiom 1: Market behavior is all-inclusive;
Axiom 2: Market behavior follows trends;
Axiom 3: History repeats itself.
🟨123 Rule
The 123 Rule is a technical analysis tool for judging trend reversals, highly applicable in the cryptocurrency market. Its core content is as follows:
Trend line breakthrough: An upward trend line is broken downward, or a downward trend line is broken upward.
No new highs or lows: In an uptrend, the price no longer makes new highs; in a downtrend, the price no longer makes new lows.
Breakthrough key points: In a downtrend, the price breaks above the previous rebound high; in an uptrend, the price breaks below the previous short-term pullback low.
As long as any two of the above three conditions are met, a trend reversal can be confirmed. Entry points typically occur after the third step confirms the breakout. The order of the 123 Rule can be flexibly changed (such as 213, 321, etc.), but the third step must be completed.
🟨2B Rule
The 2B Rule is a special form of the 123 Rule, used to signal potential entry points earlier. Its core content is as follows:
Two breakouts: In an uptrend, the price breaks through the previous high (first breakout) but fails to maintain the uptrend, quickly falling back below the previous high (second breakout). In a downtrend, the price briefly breaks below the previous low but quickly rebounds and breaks above the previous low.
False breakout: The 'B' in the 2B Rule stands for Breakout. The first breakout is false, and the price quickly retreats from the new high/low, forming a second breakout.
The 2B Rule can assist in judging trend reversals and provide earlier entry points, but it carries higher risks and should be approached with caution.
🟨Combination of the 123 Rule and the 2B Rule
Combined use: The 2B Rule can serve as a warning signal, indicating potential trend reversals. After fulfilling the 2B Rule, traders can enter positions with light exposure and combine it with the 123 Rule to opportunistically increase their positions.
Risk management: Due to significant market volatility, traders are advised to set stop-loss orders when using the 2B rule to control risk.
🟨Notes
Effectiveness of trend lines: The effectiveness of a trend line is usually measured by the number of points it connects. Trend lines that touch three or more points are generally considered stronger and more reliable than those that connect only two points.
Market volatility: The cryptocurrency market is highly volatile, and the application of trend lines and related rules should consider factors such as market sentiment and trading volume.
Risk management: Whether using the 123 Rule or the 2B Rule, proper risk management is key. It is recommended that traders test with light positions and set reasonable stop-loss levels.
By combining the 123 Rule and the 2B Rule, traders can more effectively judge trend reversals and develop corresponding trading strategies. However, the market is ever-changing, and traders need to continually train and summarize to form a trading system that suits them.
Let's encourage each other!