Trendline Breakouts with Targets
Trendline Breakouts detect diagonal support and resistance lines from pivot points, count how many times price has respected each line, and signal on the candle that closes beyond a validated trendline.
What it measures
The indicator fits candidate trendlines between consecutive pivot highs (descending) or pivot lows (ascending) and only keeps lines that have been touched at least a minimum number of times without being broken. The break itself is defined as a candle close beyond the line by a configurable buffer.
Parameters
| Name | Default | Range | Note |
|---|---|---|---|
| pivot_lookback | 5 | 2–20 | How many bars either side define a pivot. Larger values catch only major swing points. |
| min_touches | 3 | 2–5 | Minimum contacts before a trendline is considered valid. 2 is permissive, 3+ produces high-conviction lines but far fewer of them. |
| target_atr_mult | 2 | 1–5 | The projected profit target after a break, expressed in ATRs from the breakout candle. |
How it behaves
Validated trendlines tend to break with an initial impulse candle, then retest the line from the other side — the retest is the higher-quality entry. Steeper lines break more often but with less follow-through; shallow, long-standing lines produce fewer but more meaningful breaks.
When it misleads
Any diagonal line drawn from three touches will look convincing after the fact — this is survivor bias, and it is the biggest trap in trendline analysis. Live, a "validated" line often breaks and immediately reverses back through, taking out stops on both sides. Require a close (not a wick) beyond the line, add a volume or ATR filter, and never chase the impulse candle — wait for the retest.
Backtest result
Sourced backtest in preparation — we're running the rule on our own historical candles before publishing numbers we can stand behind.
FAQ
- How many touches make a trendline "valid"?
- Two touches define a line; three or more validate it. The more touches without a break, the stronger the line — but also the higher the reaction on the eventual break.
- Should I draw trendlines on wicks or bodies?
- Both conventions exist. Bodies (close-to-close) tend to produce cleaner lines and fewer whipsaws; wicks capture true swing extremes. Pick one and be consistent.
- What is a "trendline throwback"?
- The retest of a broken trendline from the opposite side. It is typically the highest-probability entry in trendline systems — the initial break carries the surprise, the throwback confirms the new regime.
Build a strategy with Trendline Breakouts
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