Technical Glossary / Chart Types & Price Representation
Line Break Chart
A chart that prints a new line only when price breaks the range of the prior lines, classically the last three.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
A line break chart, often the three-line break, adds a new rising line only if the close exceeds the high of the previous lines, and a new falling line only if the close breaks their low. If the close stays inside that range, nothing is drawn. Time is skipped.
How it works
The number of lines in the lookback is the setting. Three is the usual starting point. A larger number filters more and confirms later.
How to identify it
A sequence of hollow and filled lines of unequal length, with flat stretches where no line qualified. It is not a candle and not a Renko brick of fixed size.
Bullish reading
A new white line after a series of black lines is the standard turn up: the close has broken the range that had contained it.
Bearish reading
A new black line after white lines is the turn down. Until that break, the chart simply waits.
How traders use it
Traders use it as a closing-price filter for swing turns. Stops and targets still belong on a chart that shows the actual range.
Common mistakes
Assuming every session prints a line. Many sessions print nothing, by design.
Limitations
Highs and lows that do not change the close-based break are invisible. The chart can stay silent through a wide but unresolved range.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.