Chart Patterns  |  AUG 2007

Trading Renko Charts by Suri Duddella

Trading Renko Charts by Suri Duddella This charting technique can be used to display trends that may not be that obvious in a bar or candlestick chart. Renko charts were invented by Japanese traders hundreds of years ago and named for renga, a Japanese word for “brick.” How are they different from bar or candlestick charts? First of all they are visually attractive, making it easy to filter noise and isolate trends. They show symmetry and are effective in determining the major trend and support & resistance areas. Renko charts are also efficient in signaling trend-reversal patterns. WHAT ARE THEY? Renko charts are another way of representing price changes. They display trends in such a way that may not be obvious in a bar or candlestick chart. Renko charts are able to suppress the noise display and produce uniformity in the underlying trend. Although useful, renko charts also produce whipsaws and have serious trading caveats, but overall there are advantages to renko-based trading. One is that a trader tends to stay in a trade longer than other trend-following techniques.

by Suri Duddella