Three Line Break Chart
A Three Line Break chart draws a new white or black line only when the close extends the trend, and reverses colour only when the close breaks the high or low of the last three lines. It ignores time and filters out small moves.
Three Line Break charts are another Japanese way of cutting out noise. Each new line requires a new closing high or low; a reversal requires price to undo several lines at once. The result condenses months of candles into a much shorter series of trend lines. This entry explains the rules, the reversal test and how traders use the chart.
- Category
- Technical Analysis
- Reading time
- 4 min
- Also called
- Three line break, Line break chart, 3 line break
- Updated
Three Line Break in plain words
Three Line Break charts come from Japan, ignore time and change only when price moves enough — similar to Point & Figure charts.1
White lines show rising prices and black lines falling prices; the trend continues until the close is strong enough to warrant a reversal.1
Like other time-free charts, they focus on significant price moves rather than every period.2
How the chart is drawn, step by step
Use closing prices
Each close is compared with existing lines.
New high close
Add a white line in an uptrend.
New low close
Add a black line in a downtrend.
Inside close
Draw nothing.
Reversal test
The close must break the extreme of the last three lines.
Draw the reversal line
In the opposite colour. See Reversal.
Worked examples
Example 1 — Condensing the chart
≈ half the bars85 daily candles are converted into a Three Line Break chart.
| Candles | 85 |
| Lines | 44 |
The chart condenses the price action and filters out noise to show only significant moves.1
Example 2 — Uptrend continues
Trend extendsThe last three white lines close at $50, $52 and $55. Today closes at $57.
| Close vs last high | $57 > $55 |
| New line | White, $55 → $57 |
A close beyond the latest line extends the trend with a new line of the same colour.1
Example 3 — Reversal
Bearish reversalSame lines, which started at $48. Today closes at $47.
| Low of last three lines | $48 |
| Close | $47 < $48 |
| New line | Black, $48 → $47 |
A reversal occurs when the close moves beyond the extreme of the prior lines.1
Three Line Break vs candlestick chart
| Aspect | Three Line Break | Candlestick |
|---|---|---|
| Bars drawn | Only on new closing extremes | Every period |
| Time axis | Ignored | Fixed |
| Reversal | Rule-based break of prior lines | Interpreted |
| Shows highs and lows | No (closes only) | Yes. See Candlestick |
How traders use Three Line Break charts
Advantages and disadvantages
Advantages
- Objective reversal rule.
- Filters noise.
- Simple to read.
Disadvantages
- Late signals after big moves.
- Ignores intraday highs and lows.
- Large reversals needed after long trends.
Going deeper
Read as far as you need. Each level builds on the one before it.
Lines, not bars
Beginner
The white and black bars on these charts are called lines, and each line represents a new closing extreme.1
Two-line reversals
Intermediate
When fewer than three lines run in one direction, a reversal only needs to beat the extreme of the lines that exist, so early in a trend reversals come more easily.1
Big reversals after long trends
Advanced
Because the reversal level sits three lines back, steep trends require a large move to flip — a built-in filter that delays exits. See Trailing Stop.
Common mistakes
Using intraday highs
The chart uses closes.
Expecting early exits
Reversals come late.
Reading time into it
Line widths say nothing about days.
Ignoring context
Combine with support and resistance.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Three Line Break charts draw lines only on new closing extremes.
- They ignore time.
- A reversal needs a break of the last three lines.
- They condense charts and filter noise.
- Signals arrive late after strong trends.
Frequently asked questions
Why three lines?
Is it the same as Renko?
Can I use it for day trading?
Further learning
- Renko Chart
Bricks instead of lines.
- Kagi Chart
Another Japanese chart.
- Point and Figure Chart
The classic time-free chart.
- Reversal
What the colour change signals.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- StockCharts ChartSchool. Three Line Break Charts (opens in a new tab) Checked .
- StockCharts ChartSchool. Introduction to Point & Figure Charts (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.