Line Break Chart Strategy

אתמול

Hello All!

We should not pass this year without a gift!
My last publication in 2024 is Complete Line Break Chart Strategy with many features!
What is Line Break Chart?
"Line Break is a Japanese chart style that disregards time intervals and only focuses on price movements, similar to the Kagi and Renko chart styles. Line Break charts form a series of up and down bars (referred to as lines). Up lines represent rising prices, and down lines represent falling prices. New confirmed lines only form on the chart when closing prices break the range covered by previous lines. Users can control the number of past lines used in the calculation via the "Number of Lines" input in the chart settings. The typical "Number of Lines" setting is 3, meaning the chart forms a new up line when the closing price is above the high prices of the last three lines, and it forms a new down line when the closing price is below the past three lines' low prices. If the current price is higher, it is an up line and if it is lower, it is a down line. If the current closing price is the same or the move in the opposite direction is not large enough to warrant a reversal, l then no new line is drawn" by Tradingview. You can find it here

Now let's start examining the features of the indicator:
By using Line break reversals it shows trend on the main chart. You can create alert.


Moreover, you can decide which trade should be taken by using Risk Management in the indicator. You can set the "Maximum Risk" and then if the risk is more than you set then the trade is not taken. When trend changed it checks the distance between reversal level and open price and compare it with the Maximum Risk


Breakout:
It can find breakouts and shows on the chart. You can create alert for breakouts


It can show breakouts on the main chart:


Flip-Flops:
Upon looking at set of price break charts, the trader will notice that there are instances when uptrend blocks is followed by one reversal block, and then by a reversal to a series of uptrend blocks. The opposite is also possible: a series of downtrend blocks is followed by one reversal box and then by an immediate reversal to downtrend. This price action is called a "Flip-Flop". This structure usually produces trend continuation signal. when we see this then we better use Buy/Sell stop order. lets see this on the chart:


Temporal Sequence Table:
Sequence frequency shows the frequency distribution of the number of sequential highs and the number of sequential lows that have been generated. This is quite important to the trader who is seeking to join a trend or put on a trade when the price break reverses into a new trend direction. For example, if the pattern over the past year has been that there never were more than nine consecutive high closes, it would make sense not to enter a position late into the sequence of new high closes.
also you can see market structure. I have tried to formalize it and show it under the table. so you can understand if it's choppy market.


"Number of Lines" has very important role. While using low time frames such seconds/minutes time frame you may want to choose higher number of lines such 5,6. (this may minimize the risk of a whipsaw)


Gaps feature:
You can set Gaps on/off. if Gaps on then you can see how long it takes for each box


Reversal and Continuation Probability:
The script calculated Reversal level and Continuation probability of the trend by using Sequence frequency.


It also shows unconfirmed box and current closing price level:


Last but not least it has Overlay option for all items, and can show all items in the main chart!


P.S. I added alerts :)

Wish you all a happy new year!


Enjoy!