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Three Line Break


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Three Line Break

The three line break chart is similar in concept to point and figure charts, being a time-independant plotting of trends and reversals. The decision criteria for determining reversals are somewhat different from the PnF chart, however; a new rising line is drawn if the previous high is exceeded, or a new falling line is drawn if the price hits a new low.

The term "three line break" comes from the criterion that the price has to break the high or low of the previous three lines in order to reverse and create a line of the opposite color. This rule applies only if the price has been trending for three lines or more - if there are less than three continous bars, the range to be broken through is just the last bar.

The bars may be of variable width, as they only form a new bar when the above criteria are fulfilled. Generally the width of the bar is ignored, and the number of bars is considered more important.