Renko
Brick-based charting system by fixed point movement
Overview
Renko charting removes all time elements and shows only significant price movements via fixed-size "bricks" (boxes) stacked vertically. Each brick represents a fixed price amount; time between bricks is irrelevant. When price moves up by brick size, a white brick is drawn up; when down, a black brick is drawn to the right. This creates crystal-clear trends without time distortion, revealing support/resistance and reversals with minimal noise.
Renko is superior to time-based charts for identifying trend direction and key support/resistance levels because sideways price action (consolidation) doesn't add new bricks—the view remains unchanged until meaningful price movement occurs. This makes trends obvious and false breakouts clear. Popular with professional traders who trade pure price action uncontaminated by time.
Used primarily for swing trading and scalping on various timeframes. Works exceptionally well in trending markets; consolidations show as flat brick lines. Renko + standard candlesticks = powerful combination for institutional-grade analysis.
Formula
Parameters
| Parameter | Type | Default | Description |
|---|---|---|---|
| Brick Size | Number | 10 points | Fixed price movement required to create new brick |
| Size Type | Selection | Fixed | Fixed points, %, or ATR-based adaptive sizing |
| ATR Period (Adaptive) | Integer | 14 | ATR period for dynamic sizing; adapts to volatility |
Common Use Cases
1. Trend Lane Identification
Renko clearly shows trend lanes via brick angle. Steep brick stacks = strong trend; flat bricks = weak consolidation.
2. Entry Signals on Reversals
New black brick in uptrend = potential reversal. New white brick in downtrend = potential bottom. Clear reversal signals.
3. Support & Resistance
Prior brick extremes become support/resistance. Renko levels are exact prices for stop placement and target setting.
4. Timeframe-Independent Scalping
Renko works same on 1-min as on daily; trend mechanics unchanged. Scalpers use Renko to avoid time-based false signals.
Advantages & Limitations
✓ Advantages
- Pure Price Action: Time completely removed; focuses on meaningful price moves only.
- No False Signals: Consolidation doesn't create new bricks; trends obvious and unambiguous.
- Exact Entry/Exit Prices: Brick positions = exact S/R levels; no ambiguity for stop placement.
- Reversal Clarity: Color changes signal reversals immediately; perfect for swing traders.
! Limitations
- Brick Size Calibration: Wrong size destroys usefulness; requires testing for each instrument/timeframe.
- Platform Limited: Not standard on most retail platforms; requires TradingView/special brokers.
- Lagging Entries: Reversal brick forms only after move starts; entry timing still needs other confirmation.
- Not Real-Time: During consolidation, no new bricks form; hard to read current direction mid-bar.
Tips & Best Practices
⚙️ Use ATR-Based Sizing
Adaptive ATR multiplier adjusts to volatility automatically. 0.75-1.5 × ATR common; test for your market.
📊 Layer with Candlesticks
Use Renko for structure and trend identification; use candlesticks on same timeframe for volume and exact entry timing.
🧮 Track Brick Counts
Count bricks in current trend. 10+ bricks = strong trend; 3-5 bricks = weak/reversal risk. Trend strength = brick steepness.
⚠️ Watch Wick Fills
If high wick of black brick fills next white brick, reversal is fake. Only act on confirmed brick color switches.
Example Strategy
1. Setup: Daily Renko Chart
Plot daily Renko with ATR(14) × 1.0 sizing. Identify current trend direction (white bricks up vs black bricks down).
2. Signal: New White Brick After Black Brick Reversal
Wait for downtrend (black bricks) to reverse; when first white brick forms = early signal of uptrend reversal.
3. Entry: 4-hour Candlestick Breakout
Buy on 4-hour candlestick close above the new white brick top. Stop loss = below black brick low. Confirms reversal.
4. Target: Next Brick Stack Reversal or Prior High
Exit when Renko reverses to new black brick (uptrend broken) or hit daily profit target. Trail stop above brick reversal level.