What are they?

Speedlines are a method of trend analysis that considers different levels of price expectations as well as their pace. Also called 1/3 - 2/3 lines, speedlines are a series of trendlines that divide a price move into three equal sections. They can be used with equal validity on a variety of charts and across a wide range of time frames.

How are they calculated?

To calculate Speedlines, take a significant high-low price move and separate it into three equal parts on a vertical line. Then, draw lines from the low to intersect the vertical line at the 1/3 and 2/3 levels to produce three separate trendlines.

How are they used?

Speedlines can be used to assess the strength of an underlying trend. In an uptrend, price movement away from the trend that is supported at the first (1/3) speedline generally implies that the trend will continue. If this support fails, the trend may be seen to be weakening, and the second (2/3) line is targeted as the next support while the 1/3-line becomes resistance. A break of the 1/3 line often leads to consolidation between the 1/3 and 2/3 lines. A failure of the 2/3-trendline support confirms a breakdown of the trend. The long-term USD / CHF chart below illustrates the use of speedlines.

The chart is a good example of speedlines in action. The best part of the speedlines is during April, where we see the market retrace from the top speedline and bounce off the lower one; it serves as a classic example of speedlines acting as support / resistance. Later on in May, the market breaks below the speedline but does not close below it; it bounces back above the line and goes on to trend upwards. This is a great example of speedlines in action.