This is more or less how Demark Trendlines work. Connect two more recent lows (shadows) from right to left, called DM points N. Condition - each N has to have 3-6-9-12...20 candles (you decide the number) above the low on both sides. The bigger number the more serious is the low. Usually they use like 3-10 candles on both sides. Both lows have to have similar amount of candles. The same applies to the downtrends - you connect 2 most recent descending highs, from right to left. The ideal would be when the swing to the upside (before the breakdown) would be bigger (overextension, overbuying, auction final). You measure target by the length of the inner bow and project it from breakout. I noticed it works well with Demark Daily Pivot boxes. Breakout of R1 or S1 usually coincides with Demark trendline breakout. Daily Demark S1 or Demark R1 hold trends on hourly incredible well (better that Ichimoku or any MA). Those are great for stops. Breakout of daily Demark S1 or Demark R1 is the first sign of trend change.
I am still learning this so...
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CURRENT BREAKOUT OF TRENDLINE IS N 14 (it means there are 14 candles on both sides above both recent lows).
Significance of trends are as follows:
N = 3 - minor trend, insignificant N = 10 and more - MORE IMPORTANT TREND (less likely the breakout is false) N = 30 GLOBAL TREND
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The breakdown occured at 8 AM New York time - when American banks opened.
1. Price overstretch from trendline (extreme overbought - oversold bow) before the break happens. Its like a rubber, the more price is faraway from from trendline, the longer it will shoot when breakout oocurs
2. Candle before breakout candle has to close near the trendline...no big rejection shadows
3. 2nd candle after breakout has to be in the direction of breakout.
4. If breakout happened with a gap - really good
1. Price overstretch from trendline (extreme overbought - oversold bow) before the break happens. Its like a rubber, the more price is faraway from from trendline, the longer it will shoot when breakout oocurs
2. Candle before breakout candle has to close near the trendline...no big rejection shadows
3. 2nd candle after breakout has to be in the direction of breakout.
4. If breakout happened with a gap - really good
The more criteria are fulfilled the better.