I am wondering if anyone can help me understand how Line Break charts are constructed. I understand the basic principle; being that if a 3-bar line break chart is being used, then a new candle is only constructed when price breaks the last 3 highs/lows.
However, what I don't understand is how the bar after that is constructed if the market continues to move in the same direction.
The bar labelled 1 is what breaks the last two highs, therefore a green candle is drawn. However, what criteria is used to transition from candle 1 to candle 2? Similarly, what criteria is being used to establish the high of candle 2, and therefore move on the candle 3?
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