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Using Renko Charts to Uncover SECRET Bank LevelsRenko charting has a unique way of displaying price data by filtering out smaller fluctuations and focusing only on substantial price moves. With a setting of Average True Range (ATR) 13, Renko charts become even more powerful for finding key institutional levels—what many traders call "secret bank levels." These are the levels where large institutional traders place their orders, often leading to significant price moves. In this tutorial, we’ll dive into how you can use Renko charts with an ATR setting of 13 to identify these bank levels and improve your trading strategy. What Are Secret Bank Levels? Institutional or bank levels are price points where big players—like banks and hedge funds—are likely to buy or sell in large quantities. Retail traders can leverage these levels by understanding where the big money is moving, aligning their trades accordingly. Renko charts, with their clarity in price movement, help identify these areas by smoothing out noise and highlighting essential support and resistance zones. Why Renko Charts? Renko charts are designed to filter out minor price movements, providing a cleaner view of market trends by focusing solely on significant price changes. Unlike time-based charts, Renko charts print a new "brick" only when price moves by a specified amount, determined here by the ATR 13 setting. This brick-by-brick approach can reveal clear levels where price repeatedly finds support or resistance, often signaling where major institutions are setting up their positions. Setting Up Renko with ATR (13) Choose Your Charting Platform: Most charting software, including TradingView and MetaTrader, offers Renko charting. Make sure your platform supports Renko and ATR-based calculations. Configure Renko with ATR (13): Open the Renko chart on your selected asset (e.g., EUR/USD, GBP/USD). In your settings, set the brick size to use the ATR indicator and specify an ATR length of 13. This setting is designed to adjust the brick size based on the recent average true range, capturing a balanced view of price movement. This 13-period setting adapts to recent market volatility, allowing Renko bricks to reveal significant price movements that matter to large institutional players. Adjust Timeframes: Since Renko charts don’t follow traditional time-based intervals, switch between higher and lower timeframes (like the 1-hour or 4-hour charts) to observe different levels of institutional interest. Higher timeframes generally provide more reliable secret bank levels, but you can switch to lower timeframes for refined entry points. Identifying Bank Levels with Renko and ATR (13) Now that your chart is set up, let's move on to the process of identifying institutional levels. 1. Look for Brick Clusters at Key Levels Renko bricks tend to form clusters at significant institutional levels. When you see several bricks stacked horizontally with little movement, it often indicates a zone where price is struggling to break through, either as strong support or resistance. Use these clusters as potential entry or exit points, aligning with the institutional flow. 2. Identify Breakouts and Rejections When price breaks out of a cluster or encounters rejection (where bricks reverse direction after hitting a level), you may be witnessing bank-level reactions. Watch for bricks that quickly shift direction after hitting a level—these can signal that institutions have stepped in to either push price further or halt its momentum. 3. Note Patterns and Reversals at Round Numbers Banks and institutions often place orders at round numbers, which are psychologically significant levels (like 1.2000, 1.2500). As Renko charts with ATR (13) are sensitive to significant price changes, they can help highlight when price respects or bounces off these round numbers, offering clues to potential institutional zones. Practical Example: Trading Secret Bank Levels with Renko Let’s say you’re analyzing EUR/USD on a Renko chart with an ATR 13 setting. Identify Clusters at 1.2000: After setting up your chart, you observe a cluster of Renko bricks at 1.2000, indicating a strong support zone. This level has held multiple times, suggesting institutional buying interest. Wait for a Brick Breakout: You then see price breaking out with consecutive Renko bricks closing above 1.2000. This breakout suggests that the buying pressure might push prices higher. Enter and Manage Your Position: Take a buy position after confirming the breakout. Set your stop loss just below the cluster at 1.1980 to minimize risk. If you’re looking for a shorter-term position, aim for profit at the next round number, like 1.2100. For a longer-term trade, follow Renko’s direction, adjusting your stop as the bricks move. Tips for Trading Bank Levels with Renko and ATR (13) Trust Your Levels: Renko charts can simplify your analysis, but it’s easy to second-guess your levels. If you’ve identified strong clusters or patterns at certain price points, trust your analysis. Use Alerts to Avoid Over-Trading: TradingView and other platforms allow you to set alerts at specific price levels. This way, you won’t need to stare at charts all day. Thank you for watching and feel free to leave a comment to let me know your thoughts on Renko and if you see yourself using this chart type. -TL Turner
Education
by TLTurnerTV
2
Understanding the Renko Bricks (Educational Article)Today we are going to study a chart which is called a Renko chart. Renko chart is a chart which is typically used to study price movement. I use Renko chart many times to determine supports and resistnace. I find it easy and accurate way of determining supports and resistances. The word Renko is derived from Japanese word renga. Renga means brick. As you can see in the chart below it shows a kind of Brick formation. The brick size is determined wither by the user and mostly it depends of typical average movement on the stock historically. A new brick is formed once the price moves upwards on downwards in the same proportion or ratio of the typical brick. New brick is only added post the price moves in that particular proportion. A new brick might not be added in months if the price movement is not as per the ratio. At the same time a new brick might be added in a day or few bricks in a week is price moves accordingly. We will try to understand this concept further by looking at the chart in the post. We have used the chart of Reliance industries to understand this concept and concept only. Please do not consider this buy or sell call for the stock. As you can see in the above chart I have used a combination of RSI, EMA (50 and 200 days) and Bollinger band strategy. RSI support for Reliance is at 35.89 with current RSI at 40.13. Bollinger band suggests that support might be round the corner for the stock. The peaks from previous tops are used to find out further supports and resistances. Mid Bollinger band level and Bollinger band top level coincide with other pervious tops making them tough resistance when the price moves upwards. Mother line EMA is a resistance now and Father line EMA support is far away. All these factors indicate the support zones for the stock to be around 2736, 2657, 2601 and 2561 in the near term. Resistance for Reliance seem to be at 2814, 2972, 3006, 3048 and 3202 levels. Let me give a disclaimer again. The above data is for analysis purpose and to understand Bollinger band, RSI, effect of EMA and Renko Bricks only. Please do not trade based on the information provided here as it is just for understanding Renko charts. Disclaimer: There is a chance of biases including confirmation bias, information bias, halo effect and anchoring bias in this write-up. Investment in stocks, derivatives and mutual funds is subject to market risk please consult your investment advisor before taking financial decisions. The data, chart or any other information provided above is for the purpose of analysis and is purely educational in nature. They are not recommendations of any kind. We will not be responsible for Profit or loss due to descision taken based on this article. The names of the stocks or index levels mentioned if any in the article are for the purpose of education and analysis only. Purpose of this article is educational. Please do not consider this as a recommendation of any sorts.
NSE:RELIANCEEducation
by Happy_Candles_Investment
Exploring Renko Charts: Simple Trading Strategies for Success Today, I'm excited to introduce you to two effective trading strategies designed for Renko charts. Renko charts, unlike traditional Japanese candlestick charts, focus solely on price movements, offering traders a unique perspective on market trends and opportunities. Before diving into the strategies, let's first understand the basics of Renko charts and how they differ from Japanese candlestick charts. Renko charts are renowned for their: Absence of time: Renko charts disregard time intervals, concentrating solely on price movements. This feature helps filter out market noise, allowing traders to identify clear trends. Uniformity: Each brick on a Renko chart represents a fixed price movement, ensuring uniformity across the chart. This consistency aids in trend identification and reversal spotting. Trend identification: Renko charts excel at identifying trends due to their focus on price movements. Traders can swiftly discern trend reversals or continuations by analyzing brick patterns. Reduced noise: By filtering out minor price fluctuations, Renko charts offer cleaner data, making it easier for traders to identify significant price movements and trends. In contrast, Japanese candlestick charts focus on time intervals and include all price movements within the selected period. Both chart types have their advantages, but for our strategies, we'll be using Renko charts. Now, let's delve into the strategies: 1. Buy Green, Sell Red (with and without 13 EMA): This straightforward strategy involves buying when a green candle appears and selling when a red candle emerges. Option 1: Implement this strategy with a 13 EMA (Exponential Moving Average). Buy when a green candle closes above the 13 EMA line and sell when a red candle touches the 13 EMA line. Option 2: Execute the strategy without the 13 EMA. Simply buy on green and sell on red. While Option 1 may yield slightly delayed entries and exits, it provides additional confirmation, especially during volatile market conditions. Consider automating this strategy with an algorithmic trading bot for seamless execution. 2. Strategy that forecasts the market?: This strategy tells you if the market will go up or down after a important for example economic meeting! So, if you are interested in this strategy than write down in the comment and like (boost) this educational idea, if we get 100 likes (boosts) than I will make Part 2. Please note: When you have a basic plan, than you can just open Renko chart above 1 day time frame, you can also work good on 1 day, but if you want to see Renko chart on Intraday time frame than you need to have Premium plan. Upgrade now for intraday best experience using RENKO chart: Upgrade now
Education
by smarttrader012
4
A Renko Trading Strategy with Multiple Indicators (Update 3)An update from the last summary: Stating the obvious but the recurring pattern did not play out. This was a painful past couple of days but some realizations that I will walk through here for anyone who may be on a similar journey or realizations. “Buy high and sell low” or “buy support and sell resistance” are simple words to speak, to walk through in back testing, but, in the heat of the moment with live data and markets unfolding in ways you weren’t expecting make these phrases an near impossible accomplishment. As for the chart setup, I’ve with the following for the Renko WTI/CL chart: 25 tick block size and a 15-minute timeframe (more on this later) DEMA at 12 and 20 MA at 20 with a 9 period (or block in case of Renko) WMA Stoch of 5,3,3 and 25,3,3 DMI of 5,5 Bull Bear Power at 25 (this is new and seems to provide good insights) Wednesday and Thursday had me watching the Renko charts waiting for an opportunity to go short (remember, my trading style is to buy either Calls or Puts as near to the money as possible and at least 3 to 4 months out). From the patterns I saw on the Renko, I firmly believed that the market was ready to sell off and I wanted to be in. As an aside, I cap my losses at 10% of the price I pay for the option. In my losses this week, I realized that my strategies for every period of time that I’ve tried to trade had basically been a breakout trader. It wasn’t that I made a definitive statement of “Hey, my methodology is that of a breakout trader” but more like “Hey, I need to see confirmation of the price movement before I enter”. The problem is that the confirmation I was looking for was well after price had started moving and, as I looked at it, it was what could be classified as a breakout. And it was in my 3rd loss for the week, that I realized what I was doing wasn’t working. Sure, I could find points in time where it would have seemed to work but not this week. As closed out my 3rd loss, I read back through some items I had highlighted in the “Pivot Boss” book referenced earlier and in it found the pages were I had marked up the callout that you have to buy at support and sell into resistance if your going to succeed. It seem intuitive but in reality, it goes completely against my nature while trying to find an entry point with live data flying by. By now, if you’ve read this far, you may have picked out some items that resonate with you or you may be finding this as a serious source of entertainment :D For the discussion that continues, you’ll need to reference the previous article I wrote to see the specific charts before the price action on Thursday. The following link will give you view of how price played out. The red rectangle outline on the chart is where I was looking for price to repeat a similar pattern noted in the related article. How simple (and unrealistic) could this be. What played out was a price movement that I didn’t know how to handle and took me some time to figure out where to get in. As price continued to go up, I realized this was where I would usually just try to get in and then, I would get in at a intra-day high, have price pull back and 10-20% of my option value hit and I’d be out just to watch the market reverse. So, on this day, I resolved myself not to make a trade unless I could figure out this “buy support and sell resistance” thing. In my resolve, I agreed to some points: I will only buy at support and will sell into resistance: (the hardest concept known to man, not in understanding but execution) The key must be in the Camarilla Pivots so use them and the system that is outlined in the book. Or, as close as you can with how you want to trade. Renko chart setting will stay at 25 ticks for a block size and 15 minutes for a timeframe. What does this mean for Renko in TV? It means that price of a 25 tick increment must be held for 15 minutes before the block is committed or printed. Because volume profile and camarilla pivots are not a natural fit on the Renko charts, I’ll create a candle chart side-by-side to the Renko chart and then place all of these indicators on it. Additionally, all of the mark-ups I do for projecting the volume area on the chart and the opening range will be done on the candle chart The Renko chart will continue to have the indicators I track on it but they will be for confirmation and helping to form an opinion of the market and nothing to do with entry or exit. Remember, I want to buy support and sell resistance and not breakouts. I wanted to have multiple periods of levels on my candle chart so I included 3 sets of camarilla, a daily, weekly, and monthly set of levels. The next big decision I had to make was the timeframe for the candle chart itself. After much experimentation and debate with myself, I landed with the following: Start with an hourly chart. The first general notion of entry and if at support or resistance will come from the hourly chart. I will continue with my volume area and opening range markup but it will be for a weekly timeframe. Meaning that the volume profile indicator is set to weekly and I use the first 5 hours of the week to set the opening range. From these markups I’ll create an opinion of the coming week and a trading plan based on what I see. Then, I’ll let price movement between the camarilla pivots prove out my opinion or lead me to adjust it. Once I find a potential trigger, I will switch the 1hr candle chart to a 5 minute candle chart and look for candle setups to trigger the actual trade. What do I use for triggers and how to I decide where to look? The following chart is a bit of an eye chart but you get the idea. With the 3 camarilla pivots plus a year pivot, you can see the various levels. While it may seem like a confused mess, there is some method to the madness. The Camarilla pivots in TV allow you to color code the levels plus set the size or pixel width of the lines of the levels. For all periods, I set the pivot to black, R1/S1 and R2/S2 to purple and then based on the book’s recommendation, R3/S4 to red, R4/S3 to green, and R5/S5 to blue. For the daily, week, monthly, and yearly pivots, I set their pixel width to 1px, 2px, 3px, and 4px respectively. This is how I get a visual clue on what timeframe price is approaching (by the width) and the type of triggers or market behavior I should be looking for based on the color. I will use the weekly, monthly, and hourly pivots to look for price levels of support or resistance. It will be at these levels that I’ll look for price action to provide insight as to what the market wants to do with the level (there is a good discussion in the “Pivot Boss” book on identifying candle patterns that distills a lot of complexities of endless chapters of concepts into a few simple ones in one chapter). Once I see some type of candle pattern on the 1 hour chart that could indicate a trigger to enter, I change it to a 5 minute chart to find a pattern in the price movement of the next candle to make the entry. In theory, this should provide me with an entry at support; don’t wait for a confirmation via a breakout. So, why mess with the Renko charts then? Fair enough of a question; I believe that the Renko chart setup will filter noise out of the view and provide a cleaner view of support and resistance lines due to the nature of its makeup. If you follow along with any of this in your own charts, you will begin to see that the pivots begin to form identifiable lines of support and resistance in the Renko chart. And, back to the point that the Renko setup I have with the specific indicators and their settings seem to provide a good path toward confirmation of trends and positions. Another key issue I was struggling with was how to correlate the Renko chart with the candle chart. This is where I came up with the 5-minute chart which, after thinking about it, I realized that the 5-minute chart would reconcile nicely with the 15-minute Renko chart. If you look at how Renko charts are printed, they will print on the time frame that you set so, if a brick prints, it should do so on a :15-minute boundary. And, the 5-minute candle will correlate to it. The next chart shows the Renko with the 1hr candle side-by-side with the same rectangle. The rectangle on the 1hr is a reasonable estimate but squarely in the middle is an interesting candle formation that happens to be near the daily S5 and the weekly R1. I looked at this for awhile in real-time and thought, how do you really decide to make this trade? It seems like price has moved further from the trigger before you have the nerve to pull the trigger on the trade. Plus, if you look at the DEMA on the Renko at this time, it’s still set bearish with 20 above the 12 and the -DI was still swapped above the +DI. All things I’ve used in the past and now causing paralysis in pulling the trigger in a “buy at support” trade. The next is the same chart setup but I’ve switched to the 5 minute view and have adjusted the red rectangle in the candle chart a little. The candle chart shows the boundary of the lowest red brick, the one red brick to the left and the two green bricks to the right. In this price action, candle on the one hour chart (engulfing is corroborated by the extended wick of the green brick that is the first reversed color in the down move. However, with the DEMA swapped bearish, what would lead you to look to buy on this. There are valid cases where price continues down from the one green brick. This is where the importance of the camarilla pivots along with the 5 minute chart come in. With the engulfing candle on the 1-hour chart and the green brick on the Renko, what I should have done is use the 5-minute chart with the various pivots to find support and candle patterns to enter the market long. This would have been fulfilling the mantra of “Buy Support; Sell Resistance”. The following chart zooms in to both the Renko and the 5-minute candle in hopes to show details of how to get from potential triggers to confirmations and physical entries with tighter reins on the stops to guard more on the ‘Hope this will work’ strategy. By using the 15-minute Renko and the 5-minute chart, I can now see exactly what’s going on in the Renko bricks to get a better feel of what the market is doing. The blue double arrow on the Renko correlates with the 5-minute candle. With the first green brick being a trigger, then the key is to look at what is going on once that brick prints to see how price behaves around the Camarilla pivots. The green dashed line is the time that the first green brick printed (committed, good to go). So, what is important is to now watch the price to find a setup to enter. Or we see the market push through the support of the camarilla pivots that are in close proximity and begin the search for an entry short. The chart below is zoomed in even more on the candle chart with the daily Camarilla S4 which, from a daily context, is the last level of support before more sellers hop in and drive price lower. I’ve outlined this pivot in a green rectangle and here you can see price action and find some interesting setups. I’ve put some black arrows at some of the more interesting candles and those which are probably some type of reversal patters of 2 or 3 in nature. I’ll end this here but have more in my notes that I’ll include in a future update.
NYMEX:CL1!Education
by mxb1961
Examples of criteria for creating a trading strategyHello traders! If you "Follow" us, you can always get new information quickly. Please also click “Boost”. Have a good day. ------------------------------------- We analyze charts in a variety of ways to determine trends. I think the important thing is how to create a trading strategy using these analysis methods, not whether you can match the trend or not. Therefore, even if you know the trend, if you do not create a trading strategy properly, you may end up with small profits or even losses. Therefore, I think it is extremely important to find support and resistance points that can ultimately create a trading strategy and how to create a trading strategy based on those points. (Heikin Ashi 1D chart) (Renko 1D chart) I think the Heikin Ashi chart and Renko chart supported by TradingView charts are good charts for identifying trends. However, since the HA-Low and HA-High indicators created using the Heikin Ashi chart are implemented, we will not talk about the Heikin Ashi chart. The advantage of Heikin Ashi charts and Renko charts is that they reduce fakes and whipsaws. However, it is not easy to actually trade with only two charts. That's because it's so difficult to see. In particular, Renko charts can be more esoteric than Heikin Ashi charts. The reason is that the price is expressed in certain blocks. However, if you look at the way the chart is drawn, you can see that fakes and whipsaws have been reduced more than the Heikin Ashi chart. So, just as I created the HA-Low and HA-High indicators using the Heikin Ashi chart, I am trying to create a standardized trading strategy using the Renko chart. We added the TS-BW auxiliary indicator used in the existing chart to verify the basic direction. The overall direction can be verified by whether the BW indicator is in an upward or downward trend. Additionally, you can verify more detailed direction through the movements of the StochRSI indicator and the StochRSI EMA indicator. We added the MS-Signal indicator to the price chart section to help you see the chart trend more intuitively. With the addition of the MS-Signal indicator, I don't think there is a need to add the superTrend indicator. Since the MS-Signal indicator is a curve, we wanted to help create a trading strategy by adding the superTrend indicator, which is expressed as a line. Next, in order to create a more confident trading strategy, various indicators are displayed on the price chart so that you can intuitively check support and resistance points. By doing this, I believe that the Renko chart, which was used as a trend chart, was expressed as a tradable chart. No matter how good an analysis technique you know, if you cannot create a trading strategy that suits you, your trading is likely to ultimately fail. Therefore, once you have found an analysis technique that suits you, you should focus on reducing your psychological burden by investing more time in creating a trading strategy rather than trying to develop the analysis technique. The trading strategy is 1. Investment period 2. Investment size 3. Trading method and profit realization method I think it consists of the three things above. Steps 1 and 2 are steps to begin with a broader observation of the coin (token, item) you want to trade rather than the chart. Therefore, in the coin market, it is necessary to check whether the coin ecosystem is expanding and which themes it is included in. If you decide to trade a coin (token, item) that has been confirmed in this way, you must look at the chart of the coin (token, item) and create a trading strategy. The decisions made in steps 1 and 2 of the trading strategy are classified into intraday and medium-term investment, short-term and day trading, etc., and the appropriate investment size is determined. Accordingly, actual purchases, sales, stop losses, etc. are made in step 3. You decide. When purchasing, it is important to try to estimate the average purchase price as much as possible. To do this, it is recommended to proceed with split purchases at the support and resistance points expressed in the chart above. Selling for profit is also recommended through split sales. However, you should try to sell when the price is rising. This is because if you sell while the price is rising and falling, it can be quite difficult to create a follow-up trading strategy. Therefore, when selling, it is recommended to conduct split sales using auxiliary indicators such as the BW indicator and StochRSI indicator. I think stop-loss is something that should be done when there is a possibility that the price will fall further and cause larger losses. Therefore, how to sell at the stop loss point is very important. I believe that you can quickly learn a clear way to practice stop loss by conducting futures trading. I believe that the overall rate of return is ultimately determined by how well you do your stop loss. However, if possible, it is important to confirm your profit in advance before taking a stop loss. Therefore, I think that when deciding buy, sell, or stop-loss points, you should not rely on price issues other than the chart. This is because issues other than charts add subjective thoughts and can interfere with creating a proper trading strategy. Therefore, when deciding on step 3 of your trading strategy, it is best to look at the charts first and then read various articles afterwards. Whatever the method, if you have a trading strategy standard that suits you, that standard is the best trading strategy standard. No matter how good the trading strategy standard is, if it does not fit your investment style, there is a high possibility that the transaction will ultimately fail. When studying charts, it is best not to try to memorize the names of patterns or various indicators. Those names are not helpful at all in creating a trading strategy. Therefore, when studying charts or analysis techniques, you should try to find out what the key is. Once you understand the core content, you need to think deeply about how you can use it to create a trading strategy. You may have difficulty understanding this article because it contains a description of what you learned while conducting the transaction. Also, it may sound abstract. However, since it is information obtained through actual trading, I think it can be a way for those studying charts to learn more quickly. Have a good time. thank you --------------------------------------------------
Education
by readCrypto
1
A Renko Trading Strategy - Part 7Part 7: Some Examples of Analysis with Indicators First, let’s look at some of the key indicators that are included in the charts. Regardless of the brick size (10,25, or 50), all charts will have the same configuration. DEMA (12-period and 20-period) : These moving averages are designed to react more quickly to price changes than a traditional simple moving average (SMA). The 12-period DEMA is black, and the 20-period DEMA is red. We would look for the 12-period DEMA to cross above the 20-period as a potential bullish signal and below as a bearish signal. As you examine the charts going forward, pay close attention to these two when comparing them to the dynamics of the brick patterns. SMA (20-period) with Blue Dots : This moving average is plotted with blue dots and provides a visual indication of the longer-term trend. It's smoother and slower to react to price changes compared to the DEMA. WMA (9-period) on the 20-period SMA (Purple Line) : The WMA is used to confirm trends and reversals. When the WMA is above the SMA, it may indicate an uptrend, and vice versa for a downtrend. In terms of support and resistance, Renko bricks make it easier to spot these levels as they smooth out minor price fluctuations. Support and resistance would be identified by areas where the price has repeatedly reversed direction. When comparing the 12 and 20-period DEMA to the Renko bricks, look for areas where the DEMAs act as dynamic support or resistance to the price action indicated by the bricks. Similarly, the 20-period SMA and the 9-period WMA would be assessed for their interaction with the Renko bricks. For breakout patterns, we would look for a consolidation of Renko bricks, indicated by a tight clustering of bricks without clear direction, followed by a breakout above or below this consolidation with a corresponding move in the moving averages. Let’s identify any notable patterns or signals on the chart. We will look for: Crossovers between the DEMAs The relationship between the DEMAs and the Renko bricks Potential support and resistance levels Any consolidation patterns that might indicate breakout points The Average Directional Index (ADX) is used to determine the strength of a trend. The value of 35 that is used is higher than the standard 20 or 25, which implies the reduced noise in Renko charts. Here’s how you might interpret the ADX in conjunction with the DI lines: Consolidation : If the ADX is dropping and has crossed below the 35 level, it may indicate that the trend strength is weakening, suggesting a period of consolidation or range-bound market. ADX Below DI Lines : When the ADX drops below both the +DI (positive directional indicator) and -DI (negative directional indicator), it further suggests that neither buyers nor sellers are in control, reinforcing the consolidation signal. Watching for a Trend Change : If after dropping, the ADX starts to turn upward while below the DI lines, it could be an early sign that a new trend is starting to form. The direction of the trend would be indicated by which DI line the ADX crosses. If it crosses the +DI, it may signal the start of an uptrend; if it crosses the -DI, a downtrend might be beginning. To apply this to your Renko chart, you would look for periods where the ADX dips below 35 and pay attention to its direction relative to the DI lines. You'd also consider the brick color change on the Renko chart for confirmation of trend direction if the ADX starts to rise after the dip. Keep in mind that technical indicators should not be used in isolation; they are more effective when used in conjunction with other analysis tools and techniques. Renko charts themselves filter out smaller price movements, so the ADX on a Renko chart might not react the same way as it would on a traditional candlestick chart. Here's some ideas on how to analyze and correlate the given indicators to price action: Renko Bricks : Renko charts focus on price changes that meet a minimum amount and filter out minor price movements, thus highlighting the trend over time. A 50-tick Renko chart will only print a new brick when the price moves by 50 ticks, thereby smoothing out minor fluctuations and making trends easier to spot. The 1-hour timeframe means that each brick represents an hour's worth of price movement. Linear Regression Channel (1st and 2nd degree) : This tool is used to identify potential support and resistance levels and the overall trend direction. The 1st degree (linear) regression trendlines show the mean price movement, while the 2nd degree could show a parabolic trend which accounts for acceleration in price movement. The price often oscillates around the mean trendline, and deviations can be used to identify overbought or oversold conditions. Double Exponential Moving Average (DEMA) 12 and 20 : The DEMA is a faster-moving average that reduces lag time compared to traditional moving averages. In your setup, the DEMA 12 would be more reactive to price changes, potentially serving as a short-term trend indicator, while the DEMA 20 could be used to confirm medium-term trends. Simple Moving Average (SMA) 20 with 9 period Weighted Moving Average (WMA) : The SMA 20 is a common indicator for medium-term trend direction. When combined with the 9-period WMA, which gives more weight to recent prices, you could use crossovers between the two as potential buy/sell signals. Stochastic Oscillators (5,3,3 and 50,3,3) : Stochastic oscillators compare the closing price of a commodity to its price range over a certain period. The 5,3,3 stochastic is a fast indicator that can signal short-term overbought or oversold conditions. The 50,3,3 stochastic, being much slower, could be used to assess the longer-term momentum of the market. Average Directional Index (ADX) with the Directional Movement Index (DMI) : The ADX is used to measure the strength of a trend, whether up or down. The DMI includes both the Positive Directional Indicator (+DI) and Negative Directional Indicator (-DI), which help determine the trend direction. A rising ADX indicates a strong trend, while a falling ADX suggests a weakening trend. When analyzing the chart, consider the following correlations and insights: Renko and Regression Channel : Look for periods when the Renko bricks consistently stay on one side of the mean regression line. This could indicate a strong trend. If the price breaks through the regression channel, it might signal a potential reversal or a breakout. DEMA, SMA, and WMA : Watch for crossovers between these moving averages. A crossover of the DEMA 12 above the SMA 20 and WMA might indicate a bullish short-term momentum, while a crossover below could signal bearish momentum. Stochastic Oscillators : Look for divergence between the price and the stochastic oscillators. If the price makes new highs/lows but the stochastic does not confirm (known as a divergence), it could indicate a weakening trend. ADX and DMI : If the ADX is rising and the +DI is above the -DI, the uptrend is strong; if the -DI is above the +DI, the downtrend is strong. If the ADX is falling, the trend is considered weak or the market may be ranging. For trade setups, you might consider the following: Long Entry : A new Renko brick in the direction of the trend, a bullish crossover in moving averages, the stochastic coming out of oversold territory, and a rising ADX with +DI above -DI. Short Entry : A new Renko brick opposite the trend direction, a bearish crossover in moving averages, the stochastic coming out of overbought territory, and a rising ADX with -DI above +DI. It's crucial to back test these indicators and their correlations with historical price data to validate their predictive power. Additionally, always manage risk appropriately, as indicators are not foolproof and should be used in conjunction with other forms of analysis and sound trading principles. Part 8: Working Through Some Examples to-follow
NYMEX:CL1!Education
by mxb1961
A Renko Trading Strategy - Part 6Part 6: How to Incorporate a Stop/Loss Strategy Incorporating stop-loss strategies into trading using Renko charts and options involves careful consideration of market dynamics, the specific characteristics of options trading, and the unique aspects of Renko charts. Here are some approaches tailored to this trading strategy: 1. Setting Stop Losses Based on Renko Chart Reversal Renko Brick Reversals : Since Renko charts are designed to filter out minor price movements, a reversal (change in brick color) can be a significant indicator. For options trading, consider setting a stop-loss order if there's a reversal that contradicts your position. For instance, if trading calls based on an uptrend indicated by Renko charts, a stop-loss could be triggered by the appearance of a certain number (e.g., two or three) of consecutive red bricks, signaling a potential downtrend. Percentage of Option Value : Determine a percentage loss of the option's value that you're willing to tolerate (e.g., 30-50% of the premium paid). This approach requires monitoring the option's value relative to market movements and Renko chart signals. 2. Volatility-Based Stop Losses Average True Range (ATR) Adjustments : Although traditional Renko charts do not incorporate time or volume, you can use an additional indicator like the Average True Range (ATR) of the underlying futures contract to set volatility-adjusted stop losses. This method involves setting a stop loss at a point where the option's underlying asset moves against your position by an amount that is significant based on recent volatility, indicating the trend might not be as strong as anticipated. 3. Time-Based Exits Option Time Decay : For options, time decay (theta) is an important consideration. You might set a time-based stop-loss strategy where positions are evaluated for potential exit if there hasn't been favorable movement within a certain timeframe, considering the decay's impact on your option's value, especially as it approaches expiration. 4. Technical and Fundamental Stop Losses Renko Chart Patterns : If your Renko charts show pattern breakouts or breakdowns (e.g., failure of a breakout pattern you traded on), use these as a basis for stop-loss orders. Fundamental News: For commodities like crude oil, fundamental news (e.g., geopolitical events, supply changes) can dramatically impact prices. If such events occur and are likely to adversely affect your position, consider them as triggers for your stop-loss strategy. 5. Dynamic Stop Losses Adjust According to Market Conditions: As market conditions change, regularly review and adjust your stop-loss levels. This dynamic approach ensures that your strategy remains aligned with the current market environment and Renko chart developments. 6. Mental Stop Losses Disciplined Execution : While physical stop-loss orders placed with a broker are automatic, mental stop losses rely on the trader's discipline to execute a trade when certain conditions are met. This approach allows for flexibility in response to market conditions but requires strict adherence to predetermined exit criteria to be effective. Conclusion Creating stop-loss strategies for options trading based on Renko charts involves a blend of technical analysis, understanding of options' characteristics, and disciplined risk management. By combining Renko chart reversals, volatility adjustments, time-based considerations, and both technical and fundamental factors, traders can develop a comprehensive stop-loss strategy that protects against undue losses while allowing room for the natural ebb and flow of the markets. Regular review and adjustment of these strategies in response to market changes are crucial for maintaining their effectiveness. Part 7: Some Examples of Analysis to-follow
NYMEX:CL1!Education
by mxb1961
A Renko Trading Strategy - Part 5Part 5: Devising a Strategy Based on Buying Calls/Puts When trading crude oil (CL) using options like puts or calls, the strategy involving Renko charts and pattern recognition can be finely tuned for option trading. The choice between puts and calls will depend on the identified trend and pattern signals across the three brick sizes. Here are scenarios that illustrate when to buy puts or calls based on the described strategy: Scenario 1: Buying Calls Signal : All three Renko charts (short-term, medium-term, long-term) show a clear uptrend with consecutive green bricks. The medium-term chart breaks out of a consolidation pattern upwards, and the short-term chart shows a reversal pattern from a minor pullback, indicating a continuation of the uptrend. Action : Buy calls as the uptrend signals an expectation of higher prices ahead. Example : If the long-term chart has been in a consistent uptrend, the medium-term chart shows a breakout, and the short-term chart indicates a reversal or continuation pattern, it suggests strong bullish momentum, making it an optimal time to buy calls. Scenario 2: Buying Puts Signal : All three charts indicate a downtrend with consecutive red bricks. A double top pattern appears on the short-term chart, suggesting a reversal from a minor rally within the downtrend. The medium-term chart starts trending downwards after a consolidation, aligning with the long-term downtrend. Action : Buy puts as the combined signals suggest a continuation of the downtrend. Example : After a brief rally indicated by a double top on the short-term chart, if both the medium and long-term charts reinforce a bearish outlook with consistent red bricks, it's an indication to buy puts, expecting the price to fall. Scenario 3: Buying Calls on a Reversal Signal : The long-term chart shows a downtrend, but the medium and short-term charts indicate a reversal pattern (e.g., an inverse head and shoulders or a double bottom). The medium-term chart starts showing green bricks, suggesting the beginning of an uptrend. Action : Buy calls to capitalize on the early stages of a potential reversal and uptrend. Example : Even if the long-term trend is down, a clear reversal pattern on the short and medium-term charts that aligns with an emerging uptrend suggests a shifting momentum, making it a strategic point to buy calls. Scenario 4: Buying Puts on a Failing Rally Signal : During an uptrend on the long-term chart, both the medium and short-term charts show a rally running out of steam, evidenced by a pattern of consolidation followed by a breakout to the downside on the medium-term chart, and a double top on the short-term chart. Action : Buy puts as the failing rally suggests a potential short-term downtrend, even within a larger uptrend. Example : If the long-term trend remains bullish but short-term indicators suggest a temporary reversal, buying puts can be a strategic move to profit from the expected downturn. General Approach for Options Trading with Renko Charts: Timing : Use short-term and medium-term charts for timing your entry into options trades. The short-term chart provides early signals, while the medium-term chart offers confirmation. Direction : The long-term chart sets the overall direction for the trade. Even in a bullish long-term trend, short-term downtrends provide opportunities to buy puts, and vice versa. Volatility : Consider the implied volatility of options before entering a trade. High volatility can increase option premiums, affecting the risk-reward ratio. Expiration : Choose expiration dates that give the trade enough time to work out. Longer expirations for calls in an uptrend or puts in a downtrend can be beneficial, allowing the market trend to fully develop. By aligning option buying strategies with Renko chart signals across different time frames, traders can enhance their ability to enter and exit trades with a higher probability of success, leveraging the clarity provided by Renko charts to navigate the volatility of the crude oil market. When buying puts or calls for Crude Oil (CL) futures with an approach akin to trading futures contracts but aiming to mitigate risk, particularly concerning options' time decay and other unique characteristics, a strategic approach is crucial. There are several key strategies to consider: 1. Choose the Right Expiration Time Horizon of Your Analysis: Align the expiration of the options with the time horizon of your market analysis. If your analysis based on Renko charts suggests a trend or reversal might play out over several weeks or months, consider options that expire at least 1-3 months beyond your anticipated trend reversal or continuation point. This buffer accommodates the time needed for the market to move in your favor while accounting for time decay. Avoid Short-Term Expiries: Short-term options are more susceptible to time decay (theta). While they may be cheaper and offer higher leverage, they also require the market to move quickly in your favor. Given the nature of Renko charts to filter out minor fluctuations and focus on more significant trends, a medium to longer-term option is generally more aligned with this strategy. 2. Consider Implied Volatility (IV) High IV: When IV is high, options premiums are more expensive, reflecting greater expected volatility. Buying options in high IV environments can be risky as you're paying a premium for the expected volatility. However, if your analysis strongly suggests a significant market move, this could still be profitable. Low IV: Buying options when IV is low can be advantageous because the premiums will be cheaper, reducing the cost of entry. If the market moves in your favor and volatility increases, the value of your option could rise both due to the directional move and the increase in IV. 3. Delta and In-The-Money (ITM) Options Delta : Consider the delta of the options. Delta close to 1 (for calls) or -1 (for puts) means the option price moves nearly in lockstep with the underlying asset, similar to owning the futures contract but with limited risk. Options with higher deltas are typically more expensive but less affected by time decay relative to their intrinsic value. ITM Options: Buying ITM options can be a strategic choice for mimicking futures trading. ITM options have intrinsic value and behave more like the underlying asset, with a higher delta and less sensitivity to time decay (theta) compared to out-of-the-money (OTM) options. 4. Rolling Options Strategy : To maintain a position in the market while managing time decay, consider rolling options. As the expiration date approaches and if your market outlook remains unchanged, you can sell the nearing expiration option and buy a further out expiration option. This strategy requires careful consideration of transaction costs and potential slippage but allows you to stay in the trade with a fresh time horizon. 5. Hedging and Risk Management Diversify Expirations : Instead of buying all options with the same expiration, consider staggering expirations. This diversification can help manage risk if the market moves against your position in the short term. Adjust Positions: Be prepared to adjust your position based on market movement and upcoming economic events. Use stop-loss orders or consider buying options with different strike prices to hedge your bets. Conclusion When treating options on Crude Oil futures like trading the futures themselves but with reduced risk, selecting the right expiration date is vital, taking into account your market outlook, time decay, and implied volatility. Medium to longer-term options with consideration for delta and ITM status can more closely mimic the behavior of trading futures while offering the risk mitigation benefits of options trading. Always incorporate risk management strategies and be prepared to adjust your positions as market conditions evolve. Part 6: How to Incorporate a Stop/Loss Strategy to-follow
NYMEX:CL1!Education
by mxb1961
2
A Renko Trading Strategy - Part 4Part 4: Incorporating Patterns with Strategy Incorporating pattern recognition into a trading strategy using three different brick sizes for Renko charts can enhance decision-making by providing multiple perspectives on market momentum and trend reversals. Applying this to the WTI (CL) market, using short-term, medium-term, and long-term views with different brick sizes. 1. Short-term Brick Size (e.g., 10 ticks, 1min) Entry Signal : Look for breakout patterns or reversal patterns like a double bottom or an inverse head and shoulders pattern. This brick size will be more sensitive to recent price movements, offering early entry points. Confirmation : Use this chart to get an early indication of a trend change or to catch the beginning of a new trend. However, due to its sensitivity, it's essential to wait for confirmation from the medium-term chart to reduce the risk of false signals. 2. Medium-term Brick Size (e.g., 25 ticks, 1min) Entry Signal : This chart size is great for confirming trends identified in the short-term chart. If the medium-term chart starts to show a series of green bricks after a reversal pattern in the short-term chart, it's a stronger signal that the trend is reversing. Strategy : Use this chart to solidify your decision for entry. For example, if you notice a consolidation pattern that breaks out in the same direction as the short-term trend, it can be a good entry point. The medium-term chart helps in filtering out the noise and focusing on more sustainable trends. 3. Long-term Brick Size (e.g., 50 ticks, 1min) Entry Signal : Long-term charts are excellent for identifying the overall market trend. A clear pattern of consecutive bricks (either uptrend or downtrend) can indicate a strong market direction. Strategy : Use the long-term chart for setting the direction of your trades. Enter trades that align with the long-term trend for higher probability outcomes. The long-term trend can also serve as a backdrop for assessing the strength of medium-term signals. Combining Signals for Entry Confluence Entry: The strongest entry signals will occur when patterns or trends align across all three brick sizes. For example, if the short-term chart shows a reversal pattern, the medium-term chart begins to trend in that direction, and the long-term chart supports this with a consistent trend, it's a strong signal for entry. Breakout Entry: A breakout from a consolidation pattern (rectangle) on the medium-term chart that is also supported by a long-term trend can be a robust entry signal. The short-term chart can be used to fine-tune the entry point, such as entering after a small pullback following the breakout. Risk Management Stop-Loss Orders : Place stop-loss orders based on patterns from the medium or long-term charts to give your trades more room to breathe while still protecting against significant losses. Take-Profit Points: Set take-profit levels based on significant resistance or support levels identified in the long-term chart to capitalize on the overall market movement. Example Scenario Scenario : The long-term chart shows a steady uptrend with consecutive green bricks. The medium-term chart shows a breakout from a consolidation pattern, and the short-term chart shows a double bottom, indicating a potential reversal from a recent minor pullback. Action : Enter a long position after the double bottom on the short-term chart, with the medium-term breakout providing additional confirmation. The long-term uptrend supports the overall bullish outlook. Risk Management : Place a stop-loss below the most recent low on the medium-term chart and set a take-profit near a significant resistance level identified on the long-term chart. Conclusion By using Renko charts with three different brick sizes and recognizing patterns across these timeframes, traders can develop a nuanced and layered approach to entering the crude oil market. This strategy allows for early detection of trends, confirmation across multiple timescales, and robust risk management, leading to potentially more informed and strategic trading decisions. Part 5: Devising a Strategy Based on Buying Calls/Puts to-follow
NYMEX:CL1!Education
by mxb1961
A Renko Trading Strategy - Part 3Part 3: Patterns in Renko Charts Renko charts, like other charting methods, have identifiable patterns that traders look for as indicators of potential market movements. These patterns are appreciated for their simplicity and effectiveness in highlighting trends and reversals without the noise of minor price movements. Here are some common patterns observed in Renko charts, applicable across various markets: 1. Trend Patterns Uptrend/Downtrend: Consecutive bricks of the same color indicate a trend. An uptrend is shown by a series of green (or white) bricks, while a downtrend is depicted by red (or black) bricks. The more consecutive bricks, the stronger the trend. 2. Reversal Patterns Double Top and Double Bottom: These patterns occur when the price reaches a certain level twice but fails to break through. In Renko charts, a double top is indicated by the bricks failing to move higher after reaching a high point twice, suggesting a potential reversal from an uptrend to a downtrend. Similarly, a double bottom indicates a potential reversal from a downtrend to an uptrend. Head and Shoulders (and Inverse): This pattern is harder to spot in Renko charts due to their simplified nature but can still be identified. A head and shoulders pattern indicates a reversal from an uptrend to a downtrend, while an inverse head and shoulders suggests a reversal from a downtrend to an uptrend. 3. Consolidation Patterns Rectangles: These occur when bricks alternate colors within a range, indicating market consolidation or a period of indecision. A breakout from this pattern can indicate the direction of the next significant move. 4. Breakout Patterns Support and Resistance Breakouts: Renko charts clearly show support (a level where price consistently finds a floor) and resistance (a ceiling where price tends to top out). A breakout occurs when bricks pass through these levels, potentially indicating the start of a new trend. Strategy Implications Patterns in Renko charts can be used to devise trading strategies: Entry Points: Patterns like breakouts from consolidation ranges or reversals can provide clear entry points. Exit Points: Recognizing the end of a trend pattern or the completion of a reversal pattern can serve as a signal to exit a position to maximize gains or minimize losses. Stop-Loss Placement: Patterns can help identify significant levels for placing stop-loss orders, such as below a recent bottom in an uptrend or above a recent top in a downtrend. Advantages and Limitations The advantage of using Renko charts and identifying these patterns lies in the chart's ability to filter out minor price movements, making it easier to spot meaningful trends and reversals. However, because time and volume are not considered, Renko charts may not always reflect the full picture of market dynamics. Traders often use them in conjunction with other analysis tools to make more informed decisions. These patterns, while straightforward in theory, require practice to identify effectively and use within a comprehensive trading strategy. Part 4: Incorporating Patterns with Strategy to-follow
NYMEX:CL1!Education
by mxb1961
A Renko Trading Strategy - Part 2Part 2: Devising a Strategy with Renko Devising a trading strategy using Renko charts with three different brick sizes for the same market, like crude oil, and analyzing them on the same time scale can provide insights into market trends and momentum at various levels. The following is one of many possible approaches: 1. Choose Brick Sizes Select three different brick sizes that represent short-term, medium-term, and long-term market movements. For example: Short-term: 10 ticks Medium-term: 25 ticks Long-term: 50 ticks These sizes could be chosen based on the volatility of the market and your trading goals. 2. Set Up Charts Side by Side Prepare three Renko charts for crude oil, each with one of the chosen brick sizes. Analyzing them side by side or simultaneously will allow you to get insight into how they compare within the same time. 3. Define Your Strategy A strategy could involve looking for confluence among the charts, where signals on multiple brick sizes align, indicating a stronger trend or reversal. Here’s a potential approach: Trend Confirmation: A trend appears on the long-term chart (50 ticks), and you look for entries when the medium-term (25 ticks) chart aligns with this trend. The short-term chart (10 ticks) can provide specific entry points that minimize risk, as you're entering on minor pullbacks or consolidations within a larger confirmed trend. Trend Reversals: If the short-term chart shows a reversal pattern not yet visible on the medium- or long-term charts, it could be an early signal. Confirm this signal if the reversal starts to appear on the medium-term chart, suggesting a more significant shift in market sentiment. Divergence: If the short-term chart diverges from the medium- and long-term trends, it might indicate a potential reversal or a weakening trend. Use this information cautiously to either take profits from existing positions or prepare for a trend change. 4. Implement Risk Management Regardless of the signals, always have a clear risk management strategy. Decide on stop-loss levels and take-profit points based on the chart that you're using for entry signals. For example, if you're entering based on the short-term chart, you might set tighter stop-loss levels than if you're entering based on medium-term signals. 5. Continuous Monitoring and Adjustment The effectiveness of this strategy can vary over time due to changes in market volatility and conditions. Regularly review and adjust the brick sizes and strategy parameters as needed to align with the current market environment. 6. Example Strategy Execution Entry: Enter a trade when all three charts show a clear trend in the same direction. For example, if all charts show an uptrend, consider taking a long position. Exit: Consider exiting or taking profit if the short-term chart shows a significant reversal pattern, even if the medium- and long-term charts still indicate an uptrend. This could preempt a broader market reversal. Conclusion This multi-scale Renko chart strategy allows for a nuanced view of market dynamics, combining the clarity of trend confirmation with the sensitivity to early reversal signals. By integrating signals from different time perspectives, you can make more informed decisions and potentially improve the risk-reward ratio of your trades. Part 3: Patterns in Renko Charts to-follow
NYMEX:CL1!Education
by mxb1961
Navigating Support and Resistance with Renko ChartsToday we continue our deep dive into support and resistance levels and explore how traders can effectively utilize Renko charts and Donchian channels to identify these price zones. Renko charts, known for their simplicity and ability to filter out market noise, provide a unique perspective on price movement. We'll discuss how Renko charts work and demonstrate their effectiveness in pinpointing support and resistance levels with the help of Donchian channels. Donchian channels are a popular technical analysis tool that maps out the highest highs and lowest lows over a given period. By combining the insights from Renko charts and Donchian channels, traders gain a comprehensive approach to detecting key support and resistance areas in any market condition. Whether you're a novice trader or an experienced professional, we hope this video aids anyone seeking to enhance their ability to define support and resistance for any asset.
Education
by LeafAlgo
1
Educational: Renko Charts Explained The Renko chart is a potent tool that has grown in favor among technical analysts. Renko charts, which are derived from the Japanese word "renga," which means brick, offer a distinctive viewpoint on price action by ignoring the concept of time and concentrating only on price changes. This publication will explore the idea of Renko charts, explain how they're made, and show you how to use them to your advantage while making trading decisions. 🔷What are Renko Charts? In contras to traditionally candlesticks or bar charts Renko charts do not track price movements by time but instead use bricks or ‘blocks’ of the same size, Each bar on the daily timeframe chart here requires a price movement of 150 pips in order for a new bar to be formed. It does not matter how long it takes a new bar will not form until price price moves either 150 pips from the previous bar up or down. 🔷Renko Chart Construction: Tradingview constructs Renko bars by the following steps -Determine the brick size: The brick size represents the minimum price movement required for a new brick to form. -Identify the brick direction: By contrasting the closing price of the current brick with the high or low of the prior brick, one can establish the direction of the brick. A new brick is created if the closing price is higher than the previous brick's high or low by the brick size. -Plotting the bricks: The bricks are plotted on the chart, with each brick representing a fixed price range. The bricks are typically color-coded, with green or white bricks indicating bullish movements, and red or black bricks indicating bearish movements. 🔷How to use Renko Charts: Identifying Trend: Renko charts are useful for spotting trends since they eliminate distractions and concentrate only on meaningful price changes. A series of rising bricks indicates an uptrend, whereas a series of falling bricks indicates a decline. Moving averages or trendlines can be used by traders to verify the trend's direction. Breakout Trading: Breakout patterns can be found using Renko charts. When a fresh brick forms in the opposite direction of the prevailing trend, a breakout occurs. Can also be used for continuation breakout in current trend as well. Trade management: By giving a clear visual picture of price changes, Renko charts can help in trade management. Traders can keep an eye on the growth of new bricks and modify their trailing stops or stop-loss levels accordingly. By excluding noise from time intervals and concentrating only on noteworthy price moves, renko charts provide a distinctive viewpoint on price action. Renko charts help traders more accurately spot trends, support and resistance levels, and breakout patterns. However, Renko charts shouldn't be utilized alone, just like any other technical analysis tool. To improve trade decisions and manage risk effectively, they should be used in conjunction with other indicators and tools. Renko charts can be a useful addition to a trader's toolset with training and the right understanding, giving them a competitive edge in the volatile world of financial markets. You can access Renko charts on Tradingview by using the chart type dropdown and selecting Renko charts.
Education
by ChristopherDownie
Mastering Elliott Wave Theory with Renko ChartsElliott Wave Theory is a popular technical analysis tool used by traders to predict market patterns and trends. Developed by Ralph Nelson Elliott in the 1930s, this method is based on the idea that financial markets move in repetitive cycles or waves. In this comprehensive guide, we will discuss the fundamentals of Elliott Wave Theory and explore how Renko charts can be used as a supplemental tool to enhance your analysis. By combining these two techniques, you can gain a deeper understanding of market movements and improve your trading strategies. I. Understanding Elliott Wave Theory Basic Principles of Elliott Wave Theory Elliott Wave Theory is built on the premise that markets exhibit specific patterns, known as waves, that reflect investor psychology. These patterns can be broken down into two types: 1. Impulsive waves: These waves move in the direction of the larger trend and consist of five smaller sub-waves. These waves are marked in green below and are numbered 1,2,3,4, and 5. 2. Corrective waves: These waves move against the primary trend and consist of three smaller sub-waves. These waves are marked in red below and are numbered A, B, and C. The 5-3 Wave Pattern The complete Elliott Wave cycle consists of eight waves, with the first five forming an impulsive pattern and the last three forming a corrective pattern. This 5-3 wave pattern repeats itself, creating fractal patterns in the market. Below we have taken the main Elliot wave listed above and broken it down into the first subset. The impulse waves are labeled i, ii, iii, iv, and v and the corrective waves a, b, and c. Applying Elliott Wave Theory to Trading To utilize Elliott Wave Theory in your trading, start by identifying the primary trend and its wave count. Analyze the price action to determine if the market is in an impulsive or corrective phase. By understanding the current wave pattern, you can predict probable future movements and make informed trading decisions. II. Renko Charts: A Supplemental Tool for Elliott Wave Analysis What are Renko Charts? Renko charts are a unique type of price chart that only consider price movement and disregard time. Each block, or "brick," on a Renko chart represents a fixed price increment. When the price moves by the predetermined amount, a new brick is added to the chart at a 45 degree angle from the previous. This results in a clean, easily readable chart that highlights significant price trends. Benefits of using Renko charts By eliminating the noise of insignificant price fluctuations, Renko charts can help traders: -Identify trends more easily -Spot support and resistance levels -Recognize chart patterns and potential reversal points -Filter out false breakouts and whipsaws How to incorporate Renko charts into Elliott Wave analysis Renko charts can be a valuable addition to your Elliott Wave analysis by helping you confirm wave counts and identify high-probability trading setups. Here's how you can incorporate Renko charts into your analysis: 1. Confirming wave counts: Use Renko charts to validate your wave count by comparing the impulsive and corrective waves on both the traditional and Renko charts. If the wave count is consistent across both chart types, it increases the likelihood of a correct analysis. 2. Identifying high-probability trading setups: Renko charts can help you spot high-probability setups by highlighting significant price trends and potential reversal points. Combining this information with your Elliott Wave analysis can increase the accuracy of your trades. Indicators such as oscillators and moving averages can be useful to help identify these set-ups. Renko charts should not be used solely to make decisions as they are a synthetic chart but are a highly useful tool for identifying the underlying trends. 3. Managing risk: Utilize Renko charts to set stop-loss and take-profit levels based on support and resistance levels. This can help you manage risk effectively and protect your trading capital. Conclusion Elliott Wave Theory and Renko charts, when used together, can provide a powerful framework for analyzing market patterns and making informed trading decisions. By understanding the basic principles of Elliott Wave Theory and incorporating Renko charts as a supplemental tool, you can enhance your technical analysis skills and increase your trading success. As with any trading strategy, remember to practice and refine your techniques before applying them to live markets.
Education
by LeafAlgo
2
The Clarity of Renko'sThis is not a chart reading - and i'll keep it super short ... this is just a quick reminder that we have many powerful tools that we can use to enhance our analysis and trading outcomes.. too many that we sometimes forget to use them. The above chart shows a great example of that .. I was going thru the daily analysis and thought i should share this note with fellow TV chartists and traders. The 2 panels show 2 identical charts, same time frame, same date range, same symbol and same indicators .. the only difference, the chart on the right hand side is a Renko It's surprising to see how clearer the picture is when we analyze the chart and the price/volume action through the Renko lens. Taking for example, the 3 double/triple top formations and how they were expressed on both charts .. which chart is easier to action and trade? so the quick note here is, let's not forget about these powerful tools - and continue to leverage them as much as possible - Before initiating the next trade, check your Renko :) Note: most of my indicators and TA concepts are "Renko-friendly" ;) Notes & comments ?
Editors' picks
NASDAQ:MSFTEducation
by RedKTrader
8
Continuing Updated Renko Trading StrategyIncorporating a timeframe into the Renko Strategy The Renko charts on Trading view with the plan that I'm enrolled in will allow for a Renko chart's timeframe from 1 minute to 1 day or longer. Although Renko charts are supposed to factor out time, a timeframe is still used to 'set' the block which is an important concept to the trading strategy When publishing an initial idea in TV, you have to have a timeframe of at least 15 minutes. This isn't what I typically use but do so to accommodate TV. On individual charts, I will use a TF between 5-11 minutes depending on the market's volatility. If the timeframe is set to a small number, the Renko block will be set sooner and could lead to churn in the strategy while having a timeframe set to a larger number will delay the setting of the block which can lead to missed entries or exits. Using a combo of larger block sizes and higher timeframes of 5-11 minutes have seemed to provide good setups for the option trading strategy I use (buying Puts/Calls simple strategy based on market direction) The web has good articles on discovering patterns and levels of resistance/support using Renko charts. Another important concept with good discussions on the web is pivot points ( pivotboss.com ) My current strategy is to combine the current configurations of Renko charts with their weekly counterparts with yearly pivots (traditional and camarilla). In the book on Pivot Points (see pdf), There is an excellent chapter on pivot point analysis and % of probabilities in price action against the levels. I believe that incorporating these yearly pivots side-by-side and the Renko charts and their indicators plus the Linear Regression indicators provide a good foundation for an option trading strategy of simple buying of puts/calls. Referring to the btcusd chart, I've overlayed the 2022 traditional s1 and the camarilla s4 on the Renko chart. Looking at the DEMA 12/20 averages, they're currently split in a bullish position (12 over 20). The 12-May low tested the 2022 S1 level which coincided with the 2nd STD low. This action could be setting up a support level the market could push off. I don't trade btcusd but track it because the market moves 24x7 which provides a lot of training material to learn for other markets.
BITSTAMP:BTCUSDEducation
by mxb1961
1
Updated Renko Strategy Combined with a Weekly ChartWeekly candlestick Linear Regression indicator x3 with STD set to 1, 2, and 3 respectively. I set the color gradient to 25% on 1, 15% on 2, and 5% on 1 to differentiate the color. On the weekly charts, I set the lookback period to 45 for 45 weeks Pivots (standard pivots) on a Yearly timeframe x2. One set to 'traditional' and one set to 'camarilla' (I'll cover the static volume profile and the opening range and the volume range in an update to this at a later date) Renko charts I use the same configuration for the Linear Regression with the exception of the lookback period which is set to 90 blocks. Renko charts are not truly time based though time does play a factor in how they're implemented in trading view. I don't use pivots on the Renko charts. On both charts, you can see from the settings how the moving averages are configured On both charts, I use a dual Stoch overlayed configured at 5,3,3 and 50,3,3 Commodities channel Index Directional Movement Index I configure these indicators with a 5/50 combination regardless of the Renko or the weekly candlestick chart I track the following markets and with these Renko settings Crude oil: close/traditional/blksize=2.5 S&P 500 mini: close/traditional/blksize=50 Natural Gas: close/traditional/blksize=0.2 Soybean Meal: close/traditional/blksize=5 Aussie Dollar: close/traditional/blksize=0.005 Bitcoin: close/traditional/blksize=1000 With bitcoin trading 24x7, it's a create market to practice with using the Trading view 'paper trading' broker My intent is to expand on this setup with ideas on how to trade against these configurations:
NYMEX:CL1!Education
by mxb1961
Renko charts - Clean out the noiseI recently attended a talk by Stephen Hoad on behalf of the STA for the CISI, where he discussed his use of Renko charts. Well, it piqued my interest and I decided to take a closer look myself. Renko charts were invented in Japan, they ignore time and just use price changes that meet a minimum requirement, which to my mind sounds exactly like Point & Figure charts (I love these). Instead of X-Columns and O-Columns, Renko charts use price “bricks” that represent a fixed price move. These bricks are sometimes referred to as “blocks” or “boxes.” They move up or down in 45-degree lines with one brick per vertical column. Bricks for upward price movements are one colour while bricks for falling price movements are filled in another colour. In the example attached I have a chart of the US Dollar Index, where upward price moves are green and downwards are red. This example uses a 0.5 brick size. Please note the irregular time span along the y-axis . Also note that it uses an average true range of 14 days. For an explanation of average true range (ATR) please follow this link school.stockcharts.com N.B when adding indicators say a 20-period moving average, this will be based on the last 20 Renko values NOT the last 20 days. I always think that these types of charts look optically ‘cleaner’ or clearer than the more typical bar chart. They completely ignore time, and a brick is only drawn if price moves by a set amount. If it moves less than the set amount, no brick is drawn. In contrast to fixed price bricks, using ATR values results in fluctuating brick sizes. The default ATR is based on 14 periods and the Average True Range fluctuates over time. The brick size is based on the ATR value at the time the chart is created. Should the ATR value change the next day, then this new ATR value will be used to set the brick size. Also note that ATR values are based on standard charts, such as close-only, bar and candlestick. Disclaimer: The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
ICEUS:DX1!Education
by The_STA
Renko Charting - How it works & how to trade them for big profitDear traders In this in-depth post, I will show you everything you need to know about Renko charting, how they work, how to set them up, and how to realize significant profits with this fantastic chart technic. Renko charts are based on so-called bricks, which are build by price movement. Those bricks are built on two inputs, brick size and refresh time. And there, the most misconceptions are already starting. RENKO REFRESH / CONFIRMATION TIME The refresh time !!!! I have seen so many guides about Renko charting and how cool they are, but 99% of them don't talk about the refresh time! Renko charts look good on a, let's say, 50 brize size and a 1hour refresh time. BUT THEY DON'T WORK LIKE THIS! Here is an example of two Bitcoin Renko charts with the same brick size of 50. One of them works, and on-off them doesn't work at all for trading. Can you spot the difference? Both charts show the chart based from the 26th until the current live price. But they look different... Bitcoin Renko Chart example 1 Bitcoin Renko Chart example 2 The difference is within the refresh time. So, for example, on the Bitcoin Renko Chart example 1, we are using a 1 Hour refresh time, and on Example 2, we are using a 15 second refresh time. But what does that mean? On classic Candlestick charts, we choose the time frame of each candle. For example, let's say 1 Hour candles or 5minute candles. This means each candle represents the price changes within this time frame. Once we are looking at a Renko chart, we are not looking at the time. We are looking at price movements. That's why we define the size of a Renko brick. We don't care about how long it needs to build a 50 Points Renko brick. We care about the bricks are being constructed. So if we have a Renko chart like the example, 1 with a 1 Hour "refresh," or let's call it confirmation timeframe, the bricks will be confirmed once an hour has passed by. Here is an example with Numbers. 1 hour refresh time 1 hour refresh time Today at 2 pm, we have a Bitcoin price, for example, of 40.000, and we have a green brick confirmed at this point. Now at 2.15 pm, the Price dips down to 35.000, and at 2.59 pm, it jumps back to 41.000 and holds there until 3.00 pm. This means two new green bricks have been build and confirmed (2x 50 Points from 40.000 --> 41.000). But why is the price drop to 35.000 not being shown or displayed? It's simple... because the Price moved within this 1 Hour refresh time. Bricks are being confirmed after the refresh time. So the Price can do whatever he wants within this time. In the end, it only counts the Price at 3 pm since it's set on a 1 hour refresh time. And that's the reason why there is only 1 Time Frame / Refresh time for Renko charts! 1min or even, if possible lower! Because we don't care about TIME! We care about the price change. And with, let's say, a 15 second refresh time, the chart checks every 15 seconds whats the current Price is and confirms a new brick-based on that. Here you can see the same price movement with two different refresh times. As you can see, those two charts look significantly different even if it's the same price movement. And then you have people using Renko with a 1 hour refresh time and wonder why they have lost their trade even if two new green bricks are built... Again on Renko charting, we are looking at price changes, not time! That's why we want the refresh rate as short as possible (1min or below). You might ask, "But then i have a red and green brick every 15 seconds and maybe have 100 trades within a few mins???" NO! This is where the brick size comes into place. Selecting the right brick size is one of the essential things to trade Renko successfully. RENKO BRICK SIZES Renko brick sizes are essential to trade successfully. Keep in mind that every single Symbol, whether Bitcoin , EUR/USD , or a Tesla Stock , needs its individual brick size, matched to your trading style and the Symbol price movements. Brick sizes determine how your chart looks. The same chart with the same refresh time (which we talked about above) could look diffrent. Here are two examples at the Tesla Stock . Left side (50 Points brick size) Right side (5 Points brick size) As you can see, we have the same Symbol but with different brick sizes. on the left side, we see the Tesla Stock with a 50 Point brick size which shows only 32 Renko bricks since January 2020. On the other hand, we see the chart on the right chart the Tesla Stock with a 5 Point brick size which shows thousands of Renko bricks. With that said, brick sizes determine how many bricks we see. This is important to fit it to your trading style. A long-term Investor might use the left chart with the 50 Points bricks when a daytrader uses the 5 Points chart. You might ask yourself now, why? It's kinda "simple". Let's say I am a long-term investor, and I am looking for a Stock that I can buy for the next 2-10 years, and i need a "good" price to enter for the long-term Investment. On the Chart below, you can see the Tesla Stock with a 10 Points brick size. As you can see, there are not as many Bricks as we would have on a 1 Point brick size, for example, but this chart could help a long-term investor find a good entry for a long position. For instance, he might look at the chart and Buys Tesla Shares after a period of Red bricks once a new green brick appears and sells them once a new red brick have been formed. As you can see in that red brick period, we have a green brick that would trigger a long signal, but that's normal —That's why you have to work with a matching Stop-Loss Management. Most common and good Stop- Loss Managements include 2-3x your brick size. That means if you are trading on a 10 Points brick chart. Your Stop-Loss could be 20 or 30 Points below your entry. On our Tesla example above, that would mean a long-term investor on this chart would have a 5.5% Stop-Loss Limit, since each brick of 10 Points equals around 2.8% But now we still have the question how do I determine my brick size? There are different ways to determine your brick size, and there are two brick size options as well. You can either use traditional brick sizes or ATR brick sizes. TRADITIONAL VS ATR BRICKS Traditional bricks are simple. You go to your chart and enter manually the brick size you want to use for the specific Symbol. Try different brick sizes, look at the chart and figure out for yourself how many bricks are produced a minute, a day, or a month, and match it to your trading style. As more you want to trade, the smaller your brick size should be. That's why day traders use smaller bricks (lower point sizes), and long-term traders use bigger bricks (higher point sizes). Just match it to your preferred trading style. If you generally have no idea whats a primary brick size for a Symbol could be, check ATR bricks; they will give you an Idea. ATR bricks are built on an average brick size in the past. For example, a standard ATR is 14. This means the bricks are calculated based on the average price changes in the past 14 days. Day traders often use ATR bricks. I personally don't like them since I prefer to check the prices in the past, let's say week myself, and set up my brick size manually based on that. Also, keep in mind that you cant use Strategies with Alerts on ATR-based charts. That's also a reason why I prefer to use traditional Renko charts. But generally, ATRs are good if you are looking at a new Symbol and want a general idea about a standard brick size. Now we have talked quite a lot about what Renkos are, how you should set them up, why the brick size matters and your time frame (refresh/confirmation) should ALWAYS be 1min or lower. Additional note: To use Renko charts on 1min or lower timeframes, you need to upgrade your Tradingview version. Let's now look at how we can trade Renko charts! How to trade with Renko charts Generally, in my opinion, you can trade Renkos in three ways. Trade the trend Trade on Chart levels Automated Trading quick Buy/Sell on bricks Trade the trend If we are trading the trend with Renko charts, we are looking at trends and minor corrections to enter a new trade in the trend direction. You might already have heard " The trend is your friend" which I think is precisely why this trading style is more likely to work than others. By trading the trend with Renkos we are looking at new bricks in the trend direction to enter a position. That means on a positive trend we are waiting for a new green brick after red bricks, and on a negative trend, we are waiting for a new red brick after green bricks. Sounds complicated? It isnt. Here are some examples. Trading the trend with renko bricks Like in every strategy, not every Signal is a winner that's why I have to remember you to make sure you have an according Stop-Loss and general Trading size Management to get significantly profitable with your trades overall and long term. For example, if you are looking at a 10 point brick size and each brick equals a 1% movement, you trade with an x100 leverage on a CFD. One negative brick might already give you a margin call.. Please keep that in mind and calculate your brick size, trading size and stop-loss according to that. Here is another example of Tesla - trading the trend with Renkos on a Chart that I am using for Daytrading. Trade on Chart levels Trading on Chart levels is also an excellent technic to use Renko charts to gain profits. This technic is a bit more complex and uses traditional chart techniques combined with Renkos for entries. Here is an example of my DAX Daytrading chart I use to trade chart levels with Renko. I use the old-school technical chart analysis to determine Chart Gaps, Support, and Resistance levels. I use a higher time frame Candlestick chart to do my technical research ( Supports, Gaps etc..), a smaller candlestick chart to get a better view at certain levels, and finally, the Renko Charting to determine my entry. This means I use the Renko on these levels to confirm the trend change based on the new build Renkos and get my entries based on them. This technique needs a little more in-depth understanding of overall and general technical chart analysis and combines traditional charting with Renko charting. Now let's talk about the last trading technique Automated Trading quick Buy/Sell on bricks Let me jump in here first! This technique really depends on your brick size and your broker's spreads etc.. Having too high spreads from "bad" brokers will end up in Losses with this strategy! I only use this technique for crypto trading with some leverage.$ That being said, the strategy is quite simple. You buy on a green brick and sell on red bricks. I mainly use it for a higher volume of trades and, as mentioned above, for trading cryptos (the main ones BTC/ETH and others like Doge, Cardano etc..) but not for any new coins... I generally don't recommend trading new strange currencies, but that's another Topic. So basically, what you do is run a buy/sell indicator on your chart that has alerts on it and then connect your Tradingview Alerts with your crypto exchange to get them executed. Here is an example of my Chart, including my Renko reversal script, which has alerts that are being forwarded through the API to my Bitmex Account, where the trades get executed. I usually trade them with x5-10 leverage. If you want to know more about the indicator script, just message me. Now that we have mentioned Renko indicators, let's cover the Topic of rePaint and non rePaint indicators. rePaint vs non rePaint indicators Be aware! Renko chart indicators and their results can easily be tweaked to look good in backtesting!! You might remember what I have shown you early in the beginning of this Post. Time Frames and how the chart looked different on 1h and 15 seconds. If i would publish a renko indicator on a chart with a 1hour timeframe the backtesting would give me incredible results with 98% winning trades... At this point, you should probably know why... Remember the screenshot above? This one: So on the one-hour chart we don't see the dip that would have margin called your position in most times, but on the backtesting, it would generate a + of 100 Points. So please be aware of Indicators that show backtesting on timeframes over 1 Minute when it comes down to Renko indicators. Remember Renko Charts ALWAYS have to run on 1min or lower refresh times!! Everything else is BS. Then we also see so-called rePaint indicators and non rePaint indicators. What does that mean? You might have seen a dozen indicators for classic candlesticks and other charting and Renkos that produce great backtesting results. Then u apply them to your chart, but on some mysterious way, they don't work... Tradingview is already doing a great Job in mention it now on the Backtesting with an Attention notification that this indicator might repaint. But unfortunately, not everything is covered yet. So let me explain it to you so u can understand why that happens and how to prevent that. To have an indicator produce a Signal, you have to give him input. There are tons of Inputs for pine scripts (the code language for Tradingview script), but the important one is the open and close input. If we have an Indicator that produces a Signal on "Open", we have so-called rePaint Signals because the Signal is triggered as soon as the price opens. Look at this chart: As you can see, currently, the Price is trying to form a new red brick but it's not done yet since we know a brick is formed once the Price is achieved. On an indicator with an "Open" signal, we would have a fake alert that tells us to Sell since the Price is currently red.. But as we know, this brick can turn around, Price goes up, and we have a green brick. That's a so-called repaint. As soon as the Price turns into the green, the old sell signal would disappear "rePaint" The same is on Candle Stick charts. If i have an Indicator that tells me on green candles, I go long and on red Candles, I go short and my 15minute Candle opens in the first 5mins green I would get a buy Signal even if the Candle then turns into red and the Signal disappears. And on the Backtesting, we have the problem that this is not calculated. It only considers the finished price so the Signals look accurate... That's why good indicators always produce a Signal on "CLOSE" which means the Candle, brick or whatever you use on your Chart is closed! Nothing can affect that Candle or brick anymore since it's closed! You want an example?`Look what happened to the screenshot i just took 3 mins ago.. The red brick, which on an open would have triggered a short signal. disappeared and price went up. That's why my Indicator haven't given any signal there because it only triggers on a CLOSE The same chart Image just a few mins later.. So let me repeat this is important If you are using Indicators for Tradingview, always make sure the Signal is triggered on a CLOSE! Everything else will rePaint! For Renko Charts same rules apply, and additionally, make sure if you see Backtesting data its on a 1min or below time frame. Everything else is BS as well, and YOU know you know why. I hope this Post helped you to understand Renko charting, how they work and how u can use them to your advantage for your trading. I hope I also could explain to you the topic of Indicators, why or how they rePaint, and that Backtesting data doesn't always show you the truth! So watch out for the things I have written here before you get any new Indicator. If you have any questions about my trading style, Renkos, or indicators, just leave me a message or DM me. Kind regards qrDanielqr
BITSTAMP:BTCUSDEducation
by qrDanielqr
37