1-2-3 reversal
The Sperandeo 1-2-3 reversal is a technical method to determine if the odds are good that a trend whether long, intermediate or short term has changed.
First the trend as defined by a line drawn from the last two preceding low points (for an up trend) must be broken. That constitutes #1 Break of the trend. 2 is the test of the preceding high or low as the case may be. 3 is a close below the initial break of the trend and confirmation that the trend has now changed to up. Reverse for down trends.
Sometimes the test will form what is known as a 2b reversal. This is when the stock or index trades below or above the preceding top or bottom but then closes back above or below that point. This is often a very good sign that buying pressure or selling pressure was not strong enough to continue the trend and it often signals the exact bottom or top.
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