Renko Charts
Chances are you’ve heard of the selection of charts in Forex like candlesticks and bars, used in technical analysis. But in reality, these are not the only charts that the experts use. Surely they’re not as well-known, but if you learn how to read them, they can be quite useful in your day trades.
Renko charts are among the lesser known. They were designed by the Japanese, and are ideal for assessing price fluctuations. Analysts believe that the word “Renko” comes from the Japanese word for bricks, as the charts showcases brick formations.
The Renko chart if formed by the placing of a brick onto the contiguous column, once a currency rate pierces through support or resistance levels, by a set amount. If you see white bricks you can assume that the currency is increasing in price, thus trending to the upward direction. Black bricks are indicative of a currency that’s diminishing in value.
If you’re just learning how to find the highest highs or the lowest lows, this is the perfect system for you.
To find the right Forex trade entry points, you have to wait for the bricks to switch colors as this signals that a trend is changing. So if you want to go short, you have to wait for the black brick to appear at the end of the series of ascending white bricks. However, be cautious with rapid changes in color as it may be a brief consolidation. Always use other indicators to confirm.