Currency Traders and Forex Traders are found pretty devoted to candlestick chart but then there are yet another Renko charts which are quite different from the candlestick charts and with Renko charts, the focus remains upon prices which fulfill specific requirement when time is ignored completely. As such, owing to such an aspect, experts compare Renko charts with point and figure charts and even try to locate a similarity with tick charts. Prices may or may not change in a week or in 10 days, but any price change will have sufficient and proportionate change upon the marking. Renko does show uniqueness than other charts since bricks are used which appear similar to candlesticks as per its body appearance.
Below is an example of what a Renko chart looks like:
As is pretty visible that scores of blocks appear to be plainly straight and the colour remains constant as well, unlike the scenario most of the traders are habitual of seeing. In the above diagram, the daily routine is depicted but it still appears unique irrespective of the time.
As for Renko charts, the central theme revolves around the bricks which have a fixed value and which put forth minimal price movements. In regular charts, each of the candlesticks or bars is represented by similar date axis with days, weeks and months equally showed in a spaced manner. For each day’s activity and for every hour or week or month, it is enabled by a relative bar uniquely, but in case of Renko bars, time is neglected and price change is being under the lens. As such, brick value can be set at 10 points and charts will unlikely to attract and react until any activity with 10 points or more than this, takes place.
We can have a scenario where EUR/USD is made to trade at 1.1750 and in the next hour, it descends to 1.1748 and also registers a surge of 1.1757. Clearly, no activity of 10 points in any direction, so no outcome will be entertained to be procured and displayed onto the screens. But if, in just 10 minutes time, the specific EUR/USD pair storms higher to 1.1761 level, this will draw the bullish brick. Point to be noted is that it hardly matters if it has taken an hour and 10 minutes to get back the result, as the level is crossed, so the outcome is displayed.
How can we use Renko Table in Trading?
Not mincing words, we can easily get the most of the details and rich insights from the Renko Table in terms of price trends and about other notable aspects and can incorporate it into crucial decision making. With candlesticks, we are unable to draw much of luck but with crucial details, we can simply harp upon the market trend instead of the info that we are being fed about the market. Then, such can also be turned into stepping stones if we need to trade in larger or smaller price movements. Citing an example here, if one utilized point bricks worth 50, it will take time to constitute a bullish or bearish brick.
Under such limelight, traders are blessed with the fact that the market is in motion and you can easily keep your fingers crossed with bigger and relishing outcomes.
Besides, with Renko Table, it becomes far easier to detect the positive (supporting) trends and Negatives ones (deterrence) since prices remain under sheer and expert focus on what’s taking place rather than on falling prices. Just cast a glance at the following chart which records the weekly status of USD/CAD and support and deterrence is exhibited quite vividly out there. One can be equipped with great and reliable info about the market orientation and where it is headed to and in this way, we can easily fathom what market aspects and key areas need our special attention and what truly matters.
There appears a range of ways with which Renko charts can be drawn since points can be manipulated so as to cast and draw a fresh brick. Then again, covering the interest of the big and small trend trader, points can be made to change. For limited performance, we can consider a 5 point brick but then, for bigger trends, we would need at least a 50 point brick.
Nevertheless, the setting can be changed from the range starting from the closing price. Citing an example here, if we select a 50-point level to target our attention to, we would get a new brick drawn every time 50 point movement is recorded. As an example, currency pair which we usually target to trade may register a low of 20 pips but then it can surge 30 from the exact price and this is where 50 point level is fulfilled resulting in constituting a bullish brick.
E.g. USD/CAD dips from 1.3125 to 1.3105 followed by a u-turn to reach 1.3155 marks, clearly creating a scenario for a bullish brick.
Furthermore, Renko Tables can also be used to tune into other key features, such as ATR (Average True Range), providing us with the idea about the state of affairs and the overall momentum, following which we can easily figure out when rising becomes favourable or unfavourable to our market interests.
Three Brick Breaks
Like Candlesticks, Renko Charts also enable a three brick break scenario favourable to trading as well as to a range of other strategies and this is what the defining aspect of Renko as traders can note the reversal and a confirmation. In the below diagram, this aspect is specifically focussed and so is the action. There were numerous green bricks which got reversed later with the third brick at the high break down and this shows the start of the market to roll over. Besides, on the break down beneath the third brick, there is an assumption of the confirmation of the reversal and at exactly that point, momentum is shown to picking up downwards pace.
At the point, the shape of the candlestick is not to be paid attention to, rather the bigger picture which is that of momentum which is headed down, thereby keeping us with the wave and this is the what the end objective of Renko Table is, where we study the trend followed by promising reversals.
Not mincing words, but a vast range of options and practices are there in the market related to trading strategies but Renko tables provide useful insights that are more reliable to traders. From financial investment to investing Forex to financial planning to fund management, almost everywhere, Renko Tables can be manipulated in a more meaningful way. Be a noticeable expert in smart investment and get benefited from DicnoFX deep expertise in Forex factory.