NakInvest - 123 (Bullish & Bearish U-Pattern)

📘 Description: U-Shape 123 (Bullish & Bearish Identifier)

This indicator helps you identify the 123 reversal pattern, a powerful yet simple price action setup taught by renowned Brazilian trader Stormer.

I learned this pattern from Lucas Nakata, founder of NakInvest, who was a student of Stormer. Stormer has popularized and refined this setup in the Brazilian trading community, especially for identifying U-shaped reversals that precede strong directional moves.

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🔎 What is the 123 Pattern?

The 123 pattern is a 3-candle formation used to spot bullish or bearish reversals. It forms a “U” or inverted “U” shape and is based purely on candlestick structure — no indicators or lagging signals.

There are two versions:

✅ Bullish 123 (“U” pattern)
• Candle 1: Red candle with a large body (selling pressure).
• Candle 2: Small candle of any color (pause or indecision).
• Candle 3: Green candle with a body at least 70% the size of candle 1 (strong bullish push).

This indicates a potential bullish reversal from a prior downtrend.

❌ Bearish 123 (inverted “U” pattern)
• Candle 1: Green candle with a large body (buying pressure).
• Candle 2: Small candle of any color (pause or indecision).
• Candle 3: Red candle with a body at least 70% the size of candle 1 (strong bearish push).

This indicates a potential bearish reversal from a prior uptrend.