The Ultimate Renko Charts Tutorial

Mohit Bhandari -

What are Renko Charts?

Renko charts originated in Japan and focus solely on price changes, ignoring time. Instead of traditional candlestick charts, Renko charts represent price movements using "bricks" or "blocks." These bricks move in 45-degree lines, with one brick per vertical column. Upward price movements are represented by hollow bricks, while downward movements are filled with a solid colour.

Renko charts use a fixed brick size, filtering out smaller price movements. For example, if the brick size is set at 10 points, a move of 10 points or more is required to draw another brick. This characteristic makes Renko charts less choppy compared to traditional charts.

How to Use Renko Charts

Setting up Renko charts on trading platforms

Renko charts can be set up on trading platforms by selecting the Renko chart type and specifying parameters such as brick size and field (close or high-low range).

Interpreting Renko chart patterns

Renko chart patterns can be interpreted by identifying trends and reversals. White bricks indicate rising prices, while black bricks indicate falling prices. Support and resistance levels can be identified using troughs and peaks on the chart.

Renko charts help traders identify trends and reversals by filtering out noise and focusing on significant price changes. Trends are identified by higher highs and higher lows in uptrends, and lower lows and lower highs in downtrends.

Advantages of Renko Charts

Renko charts offer several advantages in technical analysis. They provide clarity and simplicity by focusing solely on price movements, making it easier to spot trends and key support/resistance levels.

The Difference Between Renko Charts and Heikin Ashi Charts

Renko charts differ from Heikin Ashi charts in their representation of price movements. While Renko charts use fixed bricks to represent price changes, Heikin Ashi charts use modified candlesticks to smooth out price fluctuations.

Renko Chart Strategies

Popular trading strategies using Renko charts include trend following strategies, such as identifying trend reversals using two brick reversals.

Practical examples of applying Renko chart strategies

Practical examples of applying Renko chart strategies include using moving averages and Fibonacci retracements to confirm trends and identify entry/exit points.

Renko Charts in the Indian Stock Market

Renko charts can be effectively used in the Indian stock market by considering specific market dynamics and integrating them with Indian trading practices. Traders can adjust brick sizes and parameters to suit the volatility and characteristics of Indian stocks.

FAQs on Renko charts

What is the main advantage of using Renko charts?

The main advantage of using Renko charts is their ability to filter out noise and focus on significant price movements, making it easier to identify trends and key levels.

Can Renko charts be used for day trading?

Yes, Renko charts can be used for day trading as they provide clear signals and help traders identify intraday trends and reversals.

Are Renko charts suitable for beginners?

Yes, Renko charts are suitable for beginners as they offer simplicity and clarity in analyzing price movements. However, it's essential for beginners to understand basic technical analysis concepts before using Renko charts.

Do all trading platforms support Renko charts in India?

Not all trading platforms support Renko charts in India. Traders should check with their respective platforms to see if Renko charts are available and supported.

By understanding Renko charts and implementing appropriate strategies, traders can enhance their technical analysis skills and make informed trading decisions in various markets, including the Indian stock market.