3-line break formula

[ssg10]

Hi. Can somebody describe me the rules/formulas of 3-line break chart construction in esignal? I am curious to know.

Thanks

[Doji3333]

Three Line Break...

This is a type of Japanese Candlestick Chart that tracks higher/lower closes. A "Three Line Break" (3lb) is just that - a close that breaches the previous three bars range.

So, we start with the first bar of data of a chart, record that close as the "initial closing price". Then we check each following bar for a higher or lower close. If we get a higher close, then we draw a new bar (from the initial close to the new higher close).

This first bar initiates a RANGE (only of one bar though). Now, because we only have one bar, any close above the high or below the low will generate a new bar. So, if the next two closes were within the high~low range of this first 3lb bar, then nothing is drawn. We need to draw a new bar ONLY when a price bar closes outside of the existing 3lb bar range.

This type of drawing/price tracking action continues untill you get 3 or more bars going in the same direction (up or down). At this point, reversals will only occur when any price bar closes above/below the range of the last three 3lb bars.

Thus, if the last three 3lb bars range was 0.50 and the last bar closed at $20.25, then in order to draw a reversal bar, it would have to close below $19.75.

I hope this makes sense?? If not, just ask more questions...

B