W4 – Line break

Developed by Definedge.

W4 pattern of the line break chart shows the highest range of a line in last 4 lines. It shows that there was a highest difference between two prices in the last four lines.

It is not necessary that the colour of previous lines should be the same. Colour of previous lines doesn’t matter in case of W4 lines.

Last line in a bullish trend reversal pattern will always be a W4 pattern. The reversal is more significant if W4 appears in other four-line reversal patterns. W4 appearing as a continuation pattern shows the strength of the trend in place.

Prashant Shah introduced this concept in a research paper and his book on the Line Break Charts by Prashant Shah, available for free on Shelf.

Click here to know more about the pattern.

This pattern can be plotted on the chart by adding it from the Add study menu in TradePoint & Patterns in RZone. The pattern is also available in the System Builder section. By combining this pattern with other patterns and indicators, you can create your own trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.