This is a three bar reversal, micro reversal trend against the major trend on a 1 hour, 4 hour or daily trend. This micro reversal should stop at a major reversal on a higher time frame charts, but can be traded on 15 minute charts.
Red Line- micro down on chart, which goes opposite of major trend (to grab liquidity, for next move up).
#1 on chart) is last large big bar
#2 on chart) is a bar (undecided) which can be / & happens at a major support and/or fib retracment golden zone level of (50%-62%).
#3 on chart) is large bar which closes higher then #2 bar. Aggressive traders can set entry when price action hits price action of high of #2 bar and/or conservative traders can wait for close of #3 , then enter new trade.
Green Line- micro or macro up on chart, which you profits on this trade with.
FYI: Your stop loss should always be placed at same time of entering any new trade, this one would have been appropriate to set lower then #2 candle or by your plan and/or risk management, which mine is in between 10 pips to 25 pips depending pair I am trading at that time.
- With a 10 pips stop (in example) and up too 26+ pip profit, you could have up to a 1: 2.5 Risk/Reward setup. *I mostly have 1: 2 or higher Risk/Reward setup on all trades that I enter into.
This is a simple reversal three pattern, that can be either and/or and that you should know. You can either google and/or you-tube: Three Bar Reversal Pattern for further information. Wishing you the best in trading Forex and balance in life, so you enjoy each day.