<\/span>What is a Renko chart?<\/span><\/h2>\n\n\n\nRenko candlestick charts are coming from Japan, where they first appeared and were called \"renga\", which means \"a brick\". Such candlesticks<\/a> look like small rectangle<\/a> boxes\/bricks composing the price chart.<\/p>\n\n\n\nRenko charts represent price movements directly, help to filter market noises, detect the current trend, and find important support and resistance<\/a> levels.<\/p>\n\n\n\nRenko candlesticks are rectangles of the same size, linking highs and lows of the price when it changes for a certain number of points. If the alteration of the price is smaller, a new candlestick does not emerge at all.<\/p>\n\n\n\n
Renko candlesticks are not bound to timeframes<\/a>, they are focused on price changes solely. When the market is active, there are more Renko candlesticks on the chart; when the quotations are in a flat<\/a>, and volatility<\/a> drops, there are less of them.<\/p>\n\n\n\nA new candlestick appears only when the price exceeds a set threshold. For example, if the set size of a Renko candlestick is 10 standard points, and the price has grown by 20, there will appear 2 white \"bricks\", 10 points each.<\/p>\n\n\n\n
If the price is falling, the candlesticks on the chart turn black, each of them also reflects a decrease of 10 points. Thus, a Renko chart shows the general direction of the price movement, smoothing out minor fluctuations.<\/p>\n\n\n\n![\"Renko](\"https:\/\/roboforex.com\/blog\/wp-content\/uploads\/2020\/11\/renko-995x630.png\")
<\/a><\/figure>\n\n\n\n<\/span>The advantages and drawbacks of Renko charts<\/span><\/h2>\n\n\n\nRenko chart was created for making the main market trend easier to perceive. As well as other methods of price representation, Renko candlesticks have their advantages and drawbacks.<\/p>\n\n\n\n
The advantages would be:<\/p>\n\n\n\n
- A clear averaged representation of the trend;<\/li>
- Filtering of meaningless noises on the chart;<\/li>
- Smoother work of indicators<\/a> and advisors<\/a>;<\/li>
- The chart shows the places of probable trend reversals<\/a>;<\/li>
- The chart represents key support and resistance levels<\/a>.<\/li><\/ul>\n\n\n\n
The drawbacks of the method would be:<\/p>\n\n\n\n
- Short lagging in the forming of the chart as it waits for another \"brick\" to be complete;<\/li>
- It is more difficult to detect current volatility<\/a> and consolidation areas;<\/li>
- The chart does not account for volumes.<\/li><\/ul>\n\n\n\n
<\/span>Installing and setting up Renko chart in MT4<\/span><\/h2>\n\n\n\nTo install the Renko charts to MT 4<\/a> trading terminal, first of all, download the files of a special expert advisor<\/a> RenkoExpertAdvisor via a link at the end of this article. Copy the files to the folder Experts.<\/p>\n\n\n\nIn the Main Menu, open File\/Open Data Catalog\/MQL 4\/Experts. Copy the files of the EA<\/a> into the folder, then restart the terminal.<\/p>\n\n\n\nAs a result, RenkoExpertAdvisor will appear in the Navigate window. To add it to the chart of the chosen instrument, left-click and drag it to the necessary window. Then choose Service on the instrument board, click Settings, then proceed to Expert Advisors. Tick Automatic Trade and Import DLL.<\/p>\n\n\n\n
After you drag the EA to the desired chart, open the window with settings:<\/p>\n\n\n\n
- Brick Size<\/strong> is the size of a Renko candlestick in points; 10 points by default;<\/li>
- Brick Offset<\/strong> sets the shift of the chart; 0 by default;<\/li>
- Renko TimeFrame<\/a><\/strong> is the timeframe of the Renko chart; 2 by default;<\/li>
- Show Wicks<\/strong>: if \"true\", the shadows of candlesticks are visible;<\/li>
- Emulate OnLineChart<\/strong> switches on (if \"true\") constant renewal of the Renko chart.<\/li><\/ul>\n\n\n\n
After choosing the settings, in the upper right corner of the chart, you will see a smiling face and the name RenkoExpertAdvisor. Moreover, in the upper left corner, you will see a text, telling you to open a new Renko chart in the autonomous regime. To do it, choose File\/Open Autonomously.<\/p>\n\n\n\n
You will see a window with a list of autonomous charts. Choose a chart with the parameters specified in the upper left corner of the window with the expert advisor. Open it with a double left click of the mouse. A window will appear with a Renko chart that will be constantly renewed. Now you can add indicators<\/a> to Renko charts and start trading.<\/p>\n\n\n\n![\"Renko](\"https:\/\/roboforex.com\/blog\/wp-content\/uploads\/2020\/11\/renko-settings-998x630.png\")
<\/a><\/figure>\n\n\n\n<\/span>Trading strategies with Renko charts<\/span><\/h2>\n\n\n\nThere are plenty of various strategies to use with Renko charts. Let us discuss trading tech analysis patterns<\/a> and divergences with the MACD<\/a>.<\/p>\n\n\n\n<\/span>Renko charts trading: tech analysis patterns<\/span><\/h3>\n\n\n\nThe Renko chart smoothes out price movements and eliminates minor fluctuations. Thus you can detect various price patterns<\/a> and support\/resistance levels more precisely. Trade price patterns by the classical rules of tech analysis<\/a>.<\/p>\n\n\n\nExample 1<\/h4>\n\n\n\n
On the EUR\/USD<\/a> forex<\/a> chart, in a downtrend, an inverted Head and Shoulders pattern<\/a> formed. After the price breaks away from the baseline of the pattern, open a buying position. Place a Stop Loss<\/a> behind the nearest Shoulder and take the profit at the height of the pattern.<\/p>\n\n\n\n![\"Renko](\"https:\/\/roboforex.com\/blog\/wp-content\/uploads\/2020\/11\/renko-figure-1-998x630.png\")
<\/a><\/figure>\n\n\n\nExample 2<\/h4>\n\n\n\n
On the GBP\/USD<\/a> forex chart first formed a trend continuation pattern Ascending Triangle<\/a>, which gave a signal<\/a> to buy. Then, after the ascending impulse ended, a reversal Head and Shoulders pattern<\/a> formed, giving a signal to sell.<\/p>\n\n\n\n![\"Renko](\"https:\/\/roboforex.com\/blog\/wp-content\/uploads\/2020\/11\/renko-figure-2-992x630.png\")
<\/a><\/figure>\n\n\n\n<\/span>Trading divergence of the Renko with the MACD<\/span><\/h3>\n\n\n\nFor trading, we can use the divergence<\/a> of the Renko chart and the MACD<\/a>. A buying divergence forms when the chart shows a low under the previous one, while the low of the MACD histogram turns out above the previous low. As for selling, it goes vice versa: the Renko chart shows a high above the previous one, while the high of the MACD turns out lower than the previous one.<\/p>\n\n\n\nExample 1<\/h4>\n\n\n\n
On the chart of GBP\/USD<\/a>, a bullish divergence formed. Open a buying position with the SL behind the local low of the chart. Take the Profit when evidence of an upcoming reversal appears.<\/p>\n\n\n\n![\"Renko](\"https:\/\/roboforex.com\/blog\/wp-content\/uploads\/2020\/11\/renko-divergence-1-1-1001x630.png\")
<\/a><\/figure>\n\n\n\nExample 2<\/h4>\n\n\n\n
On a chart of EUR\/USD<\/a>, there has formed a bearish divergence. Open a selling position with a Stop Loss<\/a> behind the local high of the chart. Take Profit<\/a> - when some evidence of an upcoming reversal upwards appears.<\/p>\n\n\n\n![\"Renko](\"https:\/\/roboforex.com\/blog\/wp-content\/uploads\/2020\/11\/renko-divergence-2-998x630.png\")
<\/a><\/figure>\n\n\n\n<\/span>Closing thoughts<\/span><\/h2>\n\n\n\nThe Renko chart is an original way of representing changes of quotations on the price chart, with a highlight on detecting the main trend. A trader can use it for detecting the trend, filtering market noise, and finding important support and resistance levels. Check your trading tactics on a Renko chart: it may help you achieve better results.<\/p>\n\n\n\n
Renko charts represent price movements directly, help to filter market noises, detect the current trend, and find important support and resistance<\/a> levels.<\/p>\n\n\n\n Renko candlesticks are rectangles of the same size, linking highs and lows of the price when it changes for a certain number of points. If the alteration of the price is smaller, a new candlestick does not emerge at all.<\/p>\n\n\n\n Renko candlesticks are not bound to timeframes<\/a>, they are focused on price changes solely. When the market is active, there are more Renko candlesticks on the chart; when the quotations are in a flat<\/a>, and volatility<\/a> drops, there are less of them.<\/p>\n\n\n\n A new candlestick appears only when the price exceeds a set threshold. For example, if the set size of a Renko candlestick is 10 standard points, and the price has grown by 20, there will appear 2 white \"bricks\", 10 points each.<\/p>\n\n\n\n If the price is falling, the candlesticks on the chart turn black, each of them also reflects a decrease of 10 points. Thus, a Renko chart shows the general direction of the price movement, smoothing out minor fluctuations.<\/p>\n\n\n\n Renko chart was created for making the main market trend easier to perceive. As well as other methods of price representation, Renko candlesticks have their advantages and drawbacks.<\/p>\n\n\n\n The advantages would be:<\/p>\n\n\n\n The drawbacks of the method would be:<\/p>\n\n\n\n To install the Renko charts to MT 4<\/a> trading terminal, first of all, download the files of a special expert advisor<\/a> RenkoExpertAdvisor via a link at the end of this article. Copy the files to the folder Experts.<\/p>\n\n\n\n In the Main Menu, open File\/Open Data Catalog\/MQL 4\/Experts. Copy the files of the EA<\/a> into the folder, then restart the terminal.<\/p>\n\n\n\n As a result, RenkoExpertAdvisor will appear in the Navigate window. To add it to the chart of the chosen instrument, left-click and drag it to the necessary window. Then choose Service on the instrument board, click Settings, then proceed to Expert Advisors. Tick Automatic Trade and Import DLL.<\/p>\n\n\n\n After you drag the EA to the desired chart, open the window with settings:<\/p>\n\n\n\n After choosing the settings, in the upper right corner of the chart, you will see a smiling face and the name RenkoExpertAdvisor. Moreover, in the upper left corner, you will see a text, telling you to open a new Renko chart in the autonomous regime. To do it, choose File\/Open Autonomously.<\/p>\n\n\n\n You will see a window with a list of autonomous charts. Choose a chart with the parameters specified in the upper left corner of the window with the expert advisor. Open it with a double left click of the mouse. A window will appear with a Renko chart that will be constantly renewed. Now you can add indicators<\/a> to Renko charts and start trading.<\/p>\n\n\n\n There are plenty of various strategies to use with Renko charts. Let us discuss trading tech analysis patterns<\/a> and divergences with the MACD<\/a>.<\/p>\n\n\n\n The Renko chart smoothes out price movements and eliminates minor fluctuations. Thus you can detect various price patterns<\/a> and support\/resistance levels more precisely. Trade price patterns by the classical rules of tech analysis<\/a>.<\/p>\n\n\n\n On the EUR\/USD<\/a> forex<\/a> chart, in a downtrend, an inverted Head and Shoulders pattern<\/a> formed. After the price breaks away from the baseline of the pattern, open a buying position. Place a Stop Loss<\/a> behind the nearest Shoulder and take the profit at the height of the pattern.<\/p>\n\n\n\n On the GBP\/USD<\/a> forex chart first formed a trend continuation pattern Ascending Triangle<\/a>, which gave a signal<\/a> to buy. Then, after the ascending impulse ended, a reversal Head and Shoulders pattern<\/a> formed, giving a signal to sell.<\/p>\n\n\n\n For trading, we can use the divergence<\/a> of the Renko chart and the MACD<\/a>. A buying divergence forms when the chart shows a low under the previous one, while the low of the MACD histogram turns out above the previous low. As for selling, it goes vice versa: the Renko chart shows a high above the previous one, while the high of the MACD turns out lower than the previous one.<\/p>\n\n\n\n On the chart of GBP\/USD<\/a>, a bullish divergence formed. Open a buying position with the SL behind the local low of the chart. Take the Profit when evidence of an upcoming reversal appears.<\/p>\n\n\n\n On a chart of EUR\/USD<\/a>, there has formed a bearish divergence. Open a selling position with a Stop Loss<\/a> behind the local high of the chart. Take Profit<\/a> - when some evidence of an upcoming reversal upwards appears.<\/p>\n\n\n\n The Renko chart is an original way of representing changes of quotations on the price chart, with a highlight on detecting the main trend. A trader can use it for detecting the trend, filtering market noise, and finding important support and resistance levels. Check your trading tactics on a Renko chart: it may help you achieve better results.<\/p>\n\n\n\n<\/a><\/figure>\n\n\n\n<\/span>The advantages and drawbacks of Renko charts<\/span><\/h2>\n\n\n\n
<\/span>Installing and setting up Renko chart in MT4<\/span><\/h2>\n\n\n\n
<\/a><\/figure>\n\n\n\n<\/span>Trading strategies with Renko charts<\/span><\/h2>\n\n\n\n
<\/span>Renko charts trading: tech analysis patterns<\/span><\/h3>\n\n\n\n
Example 1<\/h4>\n\n\n\n
<\/a><\/figure>\n\n\n\nExample 2<\/h4>\n\n\n\n
<\/a><\/figure>\n\n\n\n<\/span>Trading divergence of the Renko with the MACD<\/span><\/h3>\n\n\n\n
Example 1<\/h4>\n\n\n\n
<\/a><\/figure>\n\n\n\nExample 2<\/h4>\n\n\n\n
<\/a><\/figure>\n\n\n\n<\/span>Closing thoughts<\/span><\/h2>\n\n\n\n