Renko Chart Trading

Renko charts eliminate time entirely, plotting only when price moves a fixed amount, revealing pure price action without noise.

Understanding Renko Charts


How Renko Works

• Each brick represents a fixed price movement
• New brick only forms when price moves by the box size
• Ignores time completely (a brick could take minutes or days)
• All bricks are the same size
• Up bricks in one color, down bricks in another

Choosing Box Size

• Smaller boxes = more bricks, more detail, more noise
• Larger boxes = fewer bricks, smoother trends
• Common method: Use ATR (Average True Range) value
• For EUR/USD: 10-20 pip boxes for swing trading
• For Gold: 5-10 dollar boxes for day trading

Advantages Over Candlestick Charts

Noise Elimination

• No wicks or shadows to confuse
• Support and resistance lines are perfectly clear
• Trends appear as clean sequences of same-color bricks
• Pattern recognition becomes much simpler

Clear Trend Identification

• Uptrend = series of green bricks in staircase pattern
• Downtrend = series of red bricks descending
• Reversal requires price to move 2x box size against trend
• Makes trend following straightforward

Trading Strategies

Trend Reversal Strategy

1. Identify long sequence of same-color bricks (5+)
2. Wait for first opposite color brick to form
3. Enter on the second opposite color brick
4. Stop loss 2 bricks beyond entry
5. Trail stop as new bricks form in your direction

Support and Resistance Strategy

1. Draw horizontal lines at brick reversal points
2. Wait for price to approach a key level
3. Enter on bounce (same color brick off level)
4. Stop loss 1 brick beyond the level
5. Target the next major S/R level

Double Top/Bottom on Renko

1. Price reaches a level and reverses
2. Returns to the same level (within 1-2 bricks)
3. Forms opposite color brick at the level
4. Enter on second reversal with tight stop
5. Target is the depth of the pattern

Combining Renko with Indicators

Moving Averages on Renko

• 10-period MA for short-term trend
• 20-period MA for medium trend
• Price above both = strong uptrend
• Crossovers generate clean signals

RSI on Renko

• Overbought/oversold levels work well
• Divergence is clearly visible
• Combine RSI extremes with brick reversals

Limitations

Important Considerations

• Cannot see exact timing of moves
• Gaps are not visible
• Backtesting is more complex
• Not suitable for time-sensitive strategies
• Best used alongside regular charts

Key Takeaways

1. Renko removes time, shows pure price movement
2. Box size determines sensitivity
3. Clean trends and S/R levels are the main advantage
4. Always confirm with regular time-based charts
5. Best for swing trading and trend following