Renko Charts
My proprietary Forex Renko Charts FX Trading System can be found by CLICKING HERE.
Renko charts are price charts which are comprised of boxes. These boxes, which may appear as green and red, or black and white, are, better known as renko bars or bricks.
The Japanese word for brick is “renga”; therefore renko was derived from early Japanese traders who believed these boxes looked like small bricks stacked up on top of each other.
Even though renko charts may have been around for awhile, they are relatively new to a lot of traders who are more familiar with bar charts and candlestick charts. Steve Nison, a popular author on the subject of candlestick charts, has also mentioned the advantages of renko charts.
Renko Charts Explained
What makes a renko chart different? Renko charts have no “time” variable. New renko bricks are form based on price movement only. A trader may choose which size he/she wants each renko brick to represent.
For example, forex traders trading the EUR/USD currency pair may want to choose 10 pip renko bricks. When the price of the EUR/USD moves from 1.4000 pips to 1.4010 pips this represents a price movement of 10 pips and a new renko brick will appear.
Price interest points, better known as “pips” are the smallest value change in each currency pair exchange rate. When the EUR/USD moves from a price of 1.4000 to 1.4001, the exchange rate for this currency pair has moved up 1 pip.
Remember these charts are independent of “time”. If the price movement of 10 pips takes 15 seconds or 3 days, it does not affect the development of a renko chart. Simply put, whenever price moves the required distance irregardless of time involved, a new renko brick will appear.
The majority of renko charts use white renko bars for rising prices and black renko bars for falling prices. I prefer green renko bars for rising prices and red renko bars for falling prices. These 2 colors better correlate with the candlestick charts most traders are already familiar with.
Renko Bar Formation
How is a 10 pip renko bar formed? I will explain how both a green renko bar is formed for rising prices and how a red renko bar is formed for falling prices.
A new green (rising prices) 10 pip renko bar forms only after the current price surpasses the top (high price) of the previous renko bar by 10 pips. These green renko bars open on the bottom of the bar and close on the top of the bar. White green bars display the closing price which is also the high price for this specific green renko bar.
A new red (falling prices) 10 pip renko bar forms in similar fashion, but in the opposite direction of green renko bars. A 10 pip red renko bar forms only after the current price moves down and surpasses the low (low price) of the previous renko bar by 10 pips.
The red renko bars open on the top of the bar and close on the bottom of the bar. Red renko bars display the closing price which is also the low price for this specific red renko bar.
Advantages of Renko Charts
Renko charts offer many advantages over typical bar charts and candlestick charts. These include:
Renko Charts remove the “distractions” seen on typical bar or candlestick charts. These distractions include “whipsaws” such as long wicks, false breakouts and general price volatility. Renko bricks “smooth” out this activity.
Any serious forex trader needs to consider using renko charts in his/her trading toolbox. I built a complete forex trading system which includes both entries and exits based solely on renko charts. Why did I do this? I wanted to remove so many of the decisions during the trading process to make my forex trading more objective. The first thing you will notice when you begin trading with renko charts is the instant reduction of distractions and clutter on your trading screen.
Visit my homepage to review my unique renko charts forex trading system.
Renko charts are price charts which are comprised of boxes. These boxes, which may appear as green and red, or black and white, are, better known as renko bars or bricks.
The Japanese word for brick is “renga”; therefore renko was derived from early Japanese traders who believed these boxes looked like small bricks stacked up on top of each other.
Even though renko charts may have been around for awhile, they are relatively new to a lot of traders who are more familiar with bar charts and candlestick charts. Steve Nison, a popular author on the subject of candlestick charts, has also mentioned the advantages of renko charts.
Renko Charts Explained
What makes a renko chart different? Renko charts have no “time” variable. New renko bricks are form based on price movement only. A trader may choose which size he/she wants each renko brick to represent.
For example, forex traders trading the EUR/USD currency pair may want to choose 10 pip renko bricks. When the price of the EUR/USD moves from 1.4000 pips to 1.4010 pips this represents a price movement of 10 pips and a new renko brick will appear.
Price interest points, better known as “pips” are the smallest value change in each currency pair exchange rate. When the EUR/USD moves from a price of 1.4000 to 1.4001, the exchange rate for this currency pair has moved up 1 pip.
Remember these charts are independent of “time”. If the price movement of 10 pips takes 15 seconds or 3 days, it does not affect the development of a renko chart. Simply put, whenever price moves the required distance irregardless of time involved, a new renko brick will appear.
The majority of renko charts use white renko bars for rising prices and black renko bars for falling prices. I prefer green renko bars for rising prices and red renko bars for falling prices. These 2 colors better correlate with the candlestick charts most traders are already familiar with.
Renko Bar Formation
How is a 10 pip renko bar formed? I will explain how both a green renko bar is formed for rising prices and how a red renko bar is formed for falling prices.
A new green (rising prices) 10 pip renko bar forms only after the current price surpasses the top (high price) of the previous renko bar by 10 pips. These green renko bars open on the bottom of the bar and close on the top of the bar. White green bars display the closing price which is also the high price for this specific green renko bar.
A new red (falling prices) 10 pip renko bar forms in similar fashion, but in the opposite direction of green renko bars. A 10 pip red renko bar forms only after the current price moves down and surpasses the low (low price) of the previous renko bar by 10 pips.
The red renko bars open on the top of the bar and close on the bottom of the bar. Red renko bars display the closing price which is also the low price for this specific red renko bar.
Advantages of Renko Charts
Renko charts offer many advantages over typical bar charts and candlestick charts. These include:
- Enhanced Visual Appeal
- Zero Indicators on Charts
- Objective Decision Making Process
- Renko Bricks Filter Out Market Noise, i.e. “Price Whipsaws”
- Prominently displays Support and Resistance Areas
- Based on Price Action (Movement of Price)
Renko Charts remove the “distractions” seen on typical bar or candlestick charts. These distractions include “whipsaws” such as long wicks, false breakouts and general price volatility. Renko bricks “smooth” out this activity.
Any serious forex trader needs to consider using renko charts in his/her trading toolbox. I built a complete forex trading system which includes both entries and exits based solely on renko charts. Why did I do this? I wanted to remove so many of the decisions during the trading process to make my forex trading more objective. The first thing you will notice when you begin trading with renko charts is the instant reduction of distractions and clutter on your trading screen.
Visit my homepage to review my unique renko charts forex trading system.
Renko Charts - EUR/USD 10 PIP
renko charts - eur/usd 10 pips
As you can see in the picture to the left renko charts are very visual. You may click the picture to see a larger version. This is a standard renko box size of 10 pips.
AUD/USD - Daily Forex Charts Synopsis
aud/usd daily forex chart
The AUD/USD is a great currency pair to trade because I believe it trends very nicely. In April and late July of 2011 the AUD/USD reached up and touched the 1.1000 level and bounced off both times. This provides a nice area of overhead resistance for future reference, especially when we turn to renko charts to trade off areas of support and resistance. In late July (the 2nd yellow circle on the chart above) we would be looking to get short based on specific renko bar formations.
