# Three-Line Break Study on Peso

FX:USDMXN   U.S. Dollar / Mexican Peso
4189 15
Trading Techniques with the Three-Line Break Chart

Some traders prefer waiting for an extra confirmation of a trend reversal. Depending on your risk, you can follow rules below to confirm a bullish trend or bearish trend . The idea of waiting for extra confirmation would involve a tradeoff between risk and reward. The longer a trader waits for a confirmation of a trend reversal, the greater the likelihood of being correct, but the lower the profit potential since more of the new trend had already started.

Two-Line Break- Must exceed the high of two consecutive black (red) lines
Three-Line Break- Must exceed the high of three consecutive black (red) lines
Four-Line Break- Must exceed the high of four consecutive black (red) lines

Two-Line Break- Must exceed the low of two consecutive white (green) lines
Three-Line Break- Must exceed the low of two consecutive white (green) lines
Four-Line Break- Must exceed the low of two consecutive white (green) lines

Line Break Patterns to look for
Black Shoe - White Suit - Neck = Bullish signal
Black Shoe - Black Suit - Neck = Bearish Signal

Record Sessions
When there are 8-10+ consecutive lines (black, white) without two consecutive opposite lines, there is a high probability of a trend change. 8-10+ white (green) lines is considered overextended to the upside. 8-10+ black (red) lines is considered overextended to the downside.

You can also find patterns such as head and shoulders , double tops, wedges , triangles using line breaks charts, as well as find trend lines such as support/resistance .

*Note: Missed 6 on that last text overextended to the upside. That should also possibly play a role in the magnitude of what looks like a peso correction.
Thank you for the lesson. I will give this a try.
Thanks for education
Thank you for the great study of TLB chart.. i would like to know about the two lines break reversal or a headfake.. Sometime it make the false signal entry or exit... the question is can you eliminate this consequence and how to eliminate it... so i can hold the position without exit.. Thanks for reply in advance
Very intersting. Thank you.
Why 8-10 lines? ... It's a rule or just your notice.
WaveRiders
It depends on time frame. I presented daily time frame and 8-10 or more is considered overextended. Probability favors a reverse after 8-10+ consecutive, without two consecutive opposite lines. I would suggest a higher threshold for hourly and minute charts.
WaveRiders

Here is a 4-Line Break Chart. Look closely and you can see a small difference and limits the small counter moves in a bullish or bearish trend.
QuantitativeExhaustion
What is better between 3LB and 4LB ?
Your counting , it's look like logic of TD Sequential Count.
WaveRiders
It's up to your trading strategy. If your more inclined to take a position and hold then 4LB would be a better measure. 3-LB or 2-LB would be more beneficial for swing and day traders with smaller time frames. However, I like to look all the way up to 14LB for multiple time frames. There are clues in these LB's, you need to look for them with indicators. Taking all these measures will favor your timing in-and-out of a position.
QuantitativeExhaustion
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