TLB

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TLB is short for "Three Line Break" or "Technical Lineal Break Line". TLB charts are made up of a series of line break blocks and are always based on closing prices (for intraday charts, the closing price is taken to be the last price at which a transaction in a security took place).

• The top of the block shows a high in the closing price.

• The bottom of the block shows a low in the closing price.

The closing price is compared to the high and low of the previous block.

• A hollow box appears in a new column when the closing price exceeds the previous box's high price. This new block is drawn from the prior high to the new high price.

• A solid box appears in a new column when the closing price exceeds the previous box's low price. This new block is drawn from the prior low to the new low price.

• Nothing appears when the closing price does not exceed the previous high or low.

There are different ways of interpreting and acting upon TLB charts. The simplest method involves buying when a hollow block emerges after three prior solid blocks (called an upside reversal), or selling when a solid block appears after three hollow blocks (called a downside reversal).

An advantage of TLB charts is that there is no arbitrary fixed reversal amount. This means that the actual price action gives the indication of a reversal. The disadvantage of this is that this reversal indication only appears after the new trend is well under way.