Renko Charts for Trend Signals and Support or Resistance
Summary
The document explains Renko charts, which draw equal-sized boxes only after price moves by at least a chosen threshold. It describes a version that builds its boxes from minute closing prices regardless of the display chart's timeframe. The stated aim is to include more intrabar movement and reduce missed pullbacks or trend changes that can occur when using higher-timeframe closes.
A basic signal is a change from a bearish-colored box to a bullish one, or the reverse. The document says such signals may be more reliable after repeated false reversals during sideways action, and also presents Renko boxes as a way to identify support and resistance. Its main caveat is regime dependence: the method is suited to pronounced trends, while signals are unreliable in flat markets. No test results, threshold-selection method, or risk controls are provided, so the guidance is descriptive rather than evidence of profitability.
Key ideas
- Renko charts add equal-sized boxes only when price movement reaches a selected threshold.
- The described implementation constructs boxes from minute closing prices regardless of the displayed chart timeframe.
- A color change between bearish and bullish boxes serves as the basic reversal signal.
- The document suggests that signals may improve after repeated false reversals in sideways conditions.
- Renko can help mark support and resistance, but its signals are unreliable in flat markets.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.