Renko charts were developed in Japan during the late 18th century by an unknown trader who wanted a simpler way to visualize price movements. The word "Renko" is derived from the Japanese word "Renga", which means bricks. The charts are created by drawing bricks toward the trend, with a fixed brick size that the trader determines. Renko chart patterns are used to identify trends, support and resistance levels, and potential entry and exit points for trades. One advantage of using Renko charts is that they filter out market noise and focus on the underlying trend. This can make it easier for traders to identify trends and potential reversals, which can be challenging to spot on traditional candlestick charts.
Renko - Technical Analysis from A to Z
Renko charts are similar to Three Line Break charts except that in a Renko chart, a line (or "brick" as they're called) is drawn in the direction of the prior move only if prices move by a minimum amount (i.e., the box size). The bricks are always equal in size. For example, in a 5-unit Renko chart, a 20-point rally is displayed as four 5-unit tall Renko bricks. Basic trend reversals are signaled with the emergence of a new white or black brick. A new white brick indicates the beginning of a new up-trend. A new black brick indicates the start of a new downtrend.
Point n Figure (PnF Charts) - Technical Analysis from A to Z
Point & Figure ("P&F") charts differ from traditional price charts in that they completely disregard the passage of time and only display price changes. Rather than having price on the y-axis and time on the x-axis, P&F charts display price changes on both axes. This is similar to Kagi,
Renko, and Three Line Break charts.
Several chart patterns regularly appear in P&F charts. These include Double Tops and Bottoms, Bullish and Bearish Signal formations, Bullish and Bearish Symmetrical Triangles, Triple Tops and Bottoms, etc.
Renko - Technical Analysis from A to Z