Understanding the 5 Minute 1-2-3 Continuation Sell Signal Alert

The "1-2-3 Continuation Sell Signal" is a commonly observed chart pattern in stock trading, signaling a potential continuation of an existing downtrend. Here is a detailed breakdown of this pattern:

Pattern Description:

Setup:

• Bar 1: This initial bar is characterized by a substantial downward move, forming a tall red bar. It represents a strong bearish momentum.
• Bar 2: Following Bar 1, Bar 2 is comparatively smaller and often forms a mini-double-bottom with Bar 1. The smaller size indicates a temporary pause or consolidation within the downtrend.

Pattern Formation:

• Bars 1 and 2 collectively create a visual pattern resembling a mini-double-bottom, suggesting a brief consolidation before a potential continuation of the downtrend.

Trigger Action:

• Sell Signal: Execute a sell order as soon as the price falls below the lowest point reached by Bars 1 and 2. This breakdown serves as confirmation of the potential continuation of the downward movement.

Risk Management:

• Stop-Loss Placement: To manage risk, place a stop-loss order at the highest point of Bar 2. This strategic placement helps protect against adverse price movements and potential trend reversals.

Interpretation:

• The 1-2-3 Continuation Sell pattern suggests that the market is showing resilience after a brief consolidation, signaling a potential resumption of the downtrend.
• The sell signal is triggered by the breakdown below the lowest points of Bars 1 and 2, indicating a renewed bearish momentum.

Default Settings

In this pattern formation, a tall red bar is followed by a smaller red bar forming a mini-double-bottom on a 5 minute candlestick chart. By default, this alert will be triggered as soon as the price falls below the lowest point reached by Bars 1 and 2. To align with each alert, it's essential to utilize the corresponding time frame on the chart. For instance, this alert is visualized on the 5-minute candlestick chart.

Description Column

The description column of this scan will display "1-2-3 continuation sell signal", providing you with a clear indication of the specific alert that has been triggered. The description will also guide you on the optimal price to set for your stop-loss order.