What Is a Renko Chart?
A Renko chart is a type of price chart used in technical analysis that focuses purely on price movement, ignoring time and volume. Instead of showing every tick or candle, it builds “bricks” only when price moves by a set amount.
Renko comes from the Japanese word “renga” meaning brick. These charts are designed to filter out market noise and make trends easier to spot.
- Shows price movement without time-based clutter
- Each brick represents a fixed price movement (e.g., 10 pips)
- Helps traders clearly identify trends and reversals
How a Renko Chart Works
Renko charts are built using bricks (blocks) that form when price moves by a chosen value:
- Choose a brick size (e.g., 10 pips).
- When price moves up by at least that amount → a new green (bullish) brick is drawn.
- When price moves down by at least that amount → a new red (bearish) brick is drawn.
- Time is irrelevant — a brick may take seconds or hours to form, depending on volatility.
Example:
- If EUR/USD is at 1.1000 with a 10-pip brick size → a new bullish brick forms at 1.1010.
- Price must then drop to 1.0990 for a bearish brick to appear.
How Traders Use Renko Charts in Practice
Renko charts are mainly used for trend-following strategies because they make direction very clear:
- Identify support and resistance with brick formations
- Spot trend continuations and clean reversals
- Use them with moving averages or momentum indicators for confirmation
- Filter out noise during choppy, sideways markets
Why Renko Charts Matter
Renko charts simplify analysis by removing distractions from time-based charts. They help traders stay focused on price movement, not short-term volatility.
- Makes trends easier to follow
- Reduces false signals from market noise
- Works well in forex, stocks, indices, and crypto markets
- Popular among traders who value clarity and discipline
Example of a Renko Chart on EUR/USD
Imagine a Renko chart with 10-pip bricks:
- Price rises steadily from 1.1000 to 1.1040 → four green bricks form.
- Price then drops back to 1.1020 → two red bricks form, signaling a potential reversal.
