Line Break Chart
Line break charts were invented in Japan and are similar to Point & Figure and Renko charts. A Japanese trader described the three-line-break chart as a "more subtle form of point and figure charts where reversals are decided by the market and not by arbitrary rules." Line break charts ignore time and only change when prices move a certain amount. These charts show a series of vertical lines (or "blocks") of varying size (Renko uses a fixed block size). Green blocks (traditionally white) represent rising prices, red blocks (traditionally black) portray falling prices. Prices continue in the same direction until a reversal is warranted.
A reversal occurs when the closing price exceeds the high or low of the prior "X" lines. Traditionally, 3 is used for "X"; this indicator allows you to use different amounts which gives you more flexibility in analyzing price action. There are numerous resources available on the WWW that describe how line break charts are constructed and how to use them.
To view the line break chart on its own, change the main chart window to display a Line Chart and then change the "Line chart" color to "None" in the F8 properties dialog. When zooming in/out or changing the chart pair/timeframe, the indicator should resize the blocks on the next tick to fit in the main chart viewing area.
There are two user inputs:
- Lines - specifies the number of lines needed for a reversal, 3 on default.
- TopBottomBufferPct - specifies the amount of blank space at top/bottom of chart (as a percentage of price range of blocks displayed). Default is 2.
- Eliminated rows in histogram where there were no up/down sequences to provide a more concise view.
- Got rid of array error that happened when switching to timeframe(s) that needed a history update.
The following user input have been added:
- Show Consecutive Up/Down Sequences: Set to true to display histogram.
- Number of Up/Down Sequences: Specifies the number of direction changes to analyze. e.g. If set to 20, the histogram will show the sequence history of the last 20 bullish price moves and the last 20 bearish price moves. The current active direction is not included.
- Shift Histogram Up (Pixels): Number of pixels to shift the histogram up from bottom of chart.
- Shift Histogram Left (Pixels): Number of pixels to shift the histogram left from right edge of chart.
- BackgroundColorUp: Specifies the background color for the Bullish sequences.
- BackgroundColorDown: Specifies the background color for the Bearish sequences.
- BarColor: Specifies color of bars on histogram.