The "Three Line New Price Break" chart is a variation of the standard candlestick chart and is very similar to the "Point and Figure" chart. The purpose of this chart is to assist in eliminating the potential short-term reversal signals that are common on a Daily candlestick chart. This type of chart was developed to be easy to understand and use by generating few signals with a much higher probability of success.

We have found that this style of charting is very effective for stocks of commodities that exhibit an intermediate or long-term trend capacity (such as Soybean Oil, Wheat, Oats, Bonds and some currencies). Most "Blue Chip" stocks or highly liquid commodities (such as the SP 500, OEX or Gold) do not produce the best result using this type of charting. By using the Candle Vision, you are able to test the signals that are generated to determine the effectiveness of this charting technique for individual stocks or commodities.

When using this charting method to trade, there are a few simple rules and phrases that may assist you in making proper trading decisions. These rules and phrases are direct translations from Japanese to English. Most of this information came directly from Seiku Shimizu’s book titled "The Japanese Chart of Charts". He goes into great detail to explain how to effectively trade with the "Three Line New Price Break" chart.

The following detailed information will assist you in understanding most of the common terms and trading techniques for using the "Three Line New Price Break" chart: