Renko Charts – What They Are & How to Trade with Them

Renko Charts – What They Are & How to Trade with Them

What Are Renko Charts?

Renko Charts are a unique charting method that focuses solely on price movement, filtering out minor fluctuations and market noise. Unlike traditional candlestick or bar charts, Renko Charts only print a new brick when price moves a specified amount, ignoring time intervals.

Each Renko brick represents a fixed price movement (e.g., 10 pips), making trends easier to spot.

• Green bricks indicate bullish price movement.
• Red bricks indicate bearish price movement.
• No new bricks are formed unless price moves the set distance (brick size).

How to Calculate Renko Charts

• Choose a brick size (e.g., 10 pips).
• A new brick forms only when price moves at least 10 pips in one direction.
• The chart ignores time-based intervals, displaying only significant price movements.

Key Features of Renko Charts

• Filter out market noise for clearer trend analysis.
• Work well for spotting breakouts and reversals.
• Help traders avoid false signals in choppy markets.

How to Use Renko Charts in Forex Trading

1. Trend-Following Strategy

Renko Charts help traders identify strong trends:

• Buy when: A new green Renko brick appears after a series of red bricks.
• Sell when: A new red Renko brick appears after a series of green bricks.

2. Breakout Trading Strategy

Renko Charts confirm breakouts with strong price moves:

• Buy when: Price breaks above a resistance level, forming new green bricks.
• Sell when: Price drops below a support level, forming new red bricks.

Confirmation indicators: Volume increase, trendline break, moving average crossover.

3. Support & Resistance Strategy

Renko Charts highlight key support and resistance zones:

• Buy when: Price bounces off a strong support zone and forms green bricks.
• Sell when: Price rejects a resistance zone and forms red bricks.

4. Renko Charts with Moving Averages

Combining Renko Charts with a moving average (e.g., 50 EMA) enhances accuracy:

• Buy when: Price remains above the 50 EMA, and Renko bricks stay green.
• Sell when: Price stays below the 50 EMA, and Renko bricks remain red.

Pros and Cons of Using Renko Charts

✅ Pros:

• Reduce market noise for clearer trend visualization.
• Help traders identify breakouts and reversals early.
• Work well in both trending and ranging markets.

❌ Cons:

• Lag behind real-time price action due to fixed brick size.
• Require careful selection of brick size to balance sensitivity and reliability.

Final Thoughts

Renko Charts are powerful trading tools that help forex traders filter out noise, confirm trends, and optimize trade execution. When combined with support & resistance levels, moving averages, or momentum indicators, Renko Charts enhance trade accuracy and risk management.