Correct 1, 2, 3 Pattern Counting Getting the count right

Completed up-trending 1,2,3. Price must break 2. We want to trade at 3 (demand) rather than the break of 2. 2 3 1 2 Failed up-trending 1,2,3. Price does not break 2. Price goes on to break below 1. Even though the 1,2,3 did not complete we still may have been able to trade at 3 (demand). When a 1,2,3 fails we start red 1 at the highest failure point. 2 will occur somewhere below black 1. 2 1 3 1 2 Minor swings. There is no 3 until PA breaks above 2. All swings between 1 and 2 are minor swings. All the swing lows were potential 3s and could have been possible trades at demand levels. If and when PA breaks above 2 the lowest swing between 1 and 2 will become 3. If PA breaks below 1 then the highest minor swing will become the new 1. 2 1

Trend reversal. A completed 1,2,3 is violated when 3 is broken. When 3 is broken we must change the count as shown. 1 2 2 1 3 3 1 2 1 2