Renko charts are a type of technical analysis chart that is used to identify trends in the price movements of an asset.
Renko charts are a popular type of charting technique used by traders to filter out market noise and provide a clearer picture of price movements.
Renko charts are based on price movements rather than time, plotting a brick or box for each price movement that meets certain criteria, such as a certain pip value or percentage change.
Renko charts do not use time intervals for the X-axis. Instead, they use a fixed price movement, such as a certain pip value or percentage change, to determine when to add a new brick to the charts.
This indicator adds bricks only when the price moves up or down by a specific amount, filtering out market noise and providing a clearer picture of the price trend.
Renko charts are plotted using either the closing price or the high-low range of each brick. When the price moves up by a predetermined amount, a new brick is added to the charts, which is drawn in the same direction as the previous brick.
If the price moves down by the predetermined amount, a new brick is added in the opposite direction.
- Look for a bullish Renko brick, which is drawn in the same direction as the previous brick.
- Wait for the price to break above the top of the bullish Renko brick.
- Enter a long position at the market price or on a pullback to the top of the bullish Renko brick.
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- To find a bearish Renko brick, look for one that is drawn in the opposite direction from the one before it.
- Wait for the price to fall below the bearish Renko brick’s bottom.
- At the current price or on a decline to the bottom of the bearish Renko brick, start a short position.