Renko Charts - Japanese Charting Method

Renko Charts Definition

Renko charts can trace their origins to Japan and were first introduced to the West by Steve Nison in his book "Beyond Candlesticks". The actual word renko is derived from the Japanese word renga, which means bricks. Renko charts are similar to kagi charts and the three line break charts except that the renko chart is drawn in the direction of the primary trend and have a fixed size. Renko charts are also similar to point and figure charts as each brick is the same size depending on the minimum amount per brick. So, in order to generate an opposite color, the fixed brick size of the Renko must be exceeded. This of course classifies renko charts as a lagging indicator and in choppy markets can lead to a number of false signals.

Renko Chart Example

Renko charts are used to determine potential changes in price trend. Below is a chart pattern example with renko bars.

Renko Chart