Renko chart

From Wikipedia, the free encyclopedia
Jump to navigation Jump to search
Renko chart example in Forex market for EUR/USD pair

A renko chart[1] (Japanese: 練行足, romanizedrenkōashi, also written 練り足 neriashi) is a type of financial chart of Japanese origin used in technical analysis that measures and plots price changes. A renko chart consists of bricks (煉瓦, renga), which proponents say more clearly show market trends and increase the signal-to-noise ratio compared to typical candlestick charts.[2]

Construction[edit]

Renko charting is similar to point-and-figure in that time doesn't play a role in Renko charts. Renko blocks (or bricks) are plotted using the following rules:[3][4]

  • A brick size is determined, e.g. 10 points. All bricks are drawn to be of that size.
  • Once the price surpasses the lower or upper border of the current brick by the brick size, a new brick is drawn either above or below the previous one — never on the same line.
  • The new brick is always drawn farther to the right on the horizontal axis.
  • If the price surpasses the previous brick by more than one chosen size, the respective number of bricks is plotted on the chart.
  • Partial bricks are not plotted until complete brick size distance is covered by the price.

Usage[edit]

Similarly to Kagi charts, Renko charts help chartists to cancel out the noise present on time-based charts, focus on important price levels, detect support and resistance, and identify market trends.[5]

References[edit]

  1. ^ Nison, Steve (1994-11-10). Beyond Candlesticks: New Japanese Charting Techniques Revealed. John Wiley & Sons. ISBN 9780471007203.
  2. ^ Mitchell, Cory. "Renko Chart Definition and Uses". Investopedia. Retrieved 2019-09-23.
  3. ^ Mitchell, Cory. "How to Use Renko Charts in Your Trading". The Balance. Retrieved 2019-09-23.
  4. ^ "Exotic Types of Charts in Forex". www.earnforex.com. Retrieved 2019-09-23.
  5. ^ "Renko Charts [ChartSchool]". school.stockcharts.com. Retrieved 2019-09-23.