How to Trade the Pop-Up 1-2-3 Setup

The Pop-Up 1-2-3 setup is a reliable intraday pattern for identifying momentum continuation after a small reset. It typically forms quickly and signals strength when a stock pulls back slightly and then retests its recent high.

What is the Pop-Up 1-2-3 Setup?

This pattern starts with a strong upward move (1), followed by a minor pullback (2), and then a return to the recent high (3). Traders look to enter above the high of point 3 as confirmation of momentum continuation.

How to Spot the Pattern

• Look for a clean push upward with volume (point 1)
• Watch for a shallow, quick pullback (point 2)
• Price revisits the area of the initial high (point 3)
• Wait for a breakout candle above point 1’s high

Entry and Risk Management

• Entry: Place buy stop order slightly above point 1’s high
• Stop Loss: Place below the low of point 2
• Target: Risk/reward ratio of at least 2:1 or previous breakout zone

Why This Setup Works

The 1-2-3 pattern shows orderly price behavior, with buyers stepping back in at the retest. It often triggers algorithms or breakout traders who push the price even higher once the prior high breaks.

Common Mistakes

• Entering before confirmation above point 1
• Misjudging the strength of the pullback
• Trading against the trend or near major resistance

Chart Pattern

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