Renko Chart

What is a 'Renko Chart'

A Renko chart is a type of chart, developed by the Japanese, that is only concerned with price movement; time and volume are not included. It is thought to be named for the Japanese word for bricks, "renga". A renko chart is constructed by placing a brick in the next column once the price surpasses the top or bottom of the previous brick by a predefined amount. White bricks are used when the direction of the trend is up, while black bricks are used when the trend is down. This type of chart is very effective for traders to identify key support/resistance levels. Transaction signals are generated when the direction of the trend changes and the bricks alternate colors.

Renko Chart

BREAKING DOWN 'Renko Chart'

For example, a trader will sell an underlying asset when a black brick is placed at the end of series of climbing white bricks. Since this type of chart was designed as a way to follow the general price trend of an asset, there can often be false signals where the color of the bricks changes too early, producing a whip-saw effect.

RELATED TERMS
  1. Brick And Mortar

    A traditional "street-side" business that deals with its customers ...
  2. Goldbrick Shares

    Stock in a company that appears to be worth more than it really ...
  3. Commercial Bank

    A financial institution that provides services, such as accepting ...
  4. Point & Figure Chart

    A chart that plots day-to-day price movements without taking ...
  5. Line Chart

    A style of chart that is created by connecting a series of data ...
  6. Kagi Chart

    A type of chart developed by the Japanese in the 1870s that uses ...
Related Articles
  1. Chart Advisor

    Bank of America Corp.

    Today we've chosen to take a look at the renko chart of Bank of America Corp. (NYSE:BAC). This type of chart is not commonly used by beginner traders, but as you will see here, it can be very ...
  2. Economics

    What Does Brick and Mortar Mean?

    Brick and mortar stores are traditional street-side businesses that deal with customers face-to-face.
  3. Active Trading

    Trading Without Noise

    False signals can drown out underlying trends. Find out how to tone them down and tune them out.
  4. Trading Strategies

    Beginner's Guide To Stockcharts.com: Changing The Chart Type

    This is one of the strengths of stockcharts.com as there are all sorts of chart types available to users. Every option is available to all users, so even free members have the ability to express ...
  5. Investing

    Why Lego Still Appeals To Children

    As children's toys become more and more technology driven, e.g. tablets, smartphone games, video games, etc., how has Lego stayed relevant as one of the most popular children toys?
  6. Entrepreneurship

    5 Raleigh-based Startups That Emerged This Century

    Learn about the startup scene in the Research Triangle hub of Raleigh, North Carolina. Discover which startups are the hottest to emerge from this tech city.
  7. Trading Strategies

    Technical Analysis: Chart Types

    By Cory Janssen, Chad Langager and Casey MurphyThere are four main types of charts that are used by investors and traders depending on the information that they are seeking and their individual ...
  8. Active Trading Fundamentals

    Beginner Trading Fundamentals: Charting

    Charts are a trader’s window to the markets. Here we look at how to set up clear, easy-to-read, high performance charts.
  9. Chart Advisor

    Playing Xs and Os With Alaska Air (ALK)

    Playing Xs and Os With Alaska Air
  10. Forex Education

    Tips For Creating Profitable Stock Charts

    Find out how to create well-designed charts that will enhance your market analysis.
RELATED FAQS
  1. Point and Figure Charting Using Count Analysis

    See how traders use count analysis on point and figure charts, and learn why this method differs from more traditional types ... Read Answer >>
  2. What are my savings options?

    Hey, I'm looking to invest about 3 grand in some type of account so it matures over time and collects interest. I already ... Read Answer >>
  3. What are the advantages and disadvantages to dealing with internet-only banks?

    In recent years, large companies have set up internet-only banks as a means of diversifying into the financial sector and ... Read Answer >>
  4. How should a risk-averse investor build a retirement portfolio?

    Learn about a strategy to take advantage of a higher high failure on a chart, as well as the basics of trend trading and ... Read Answer >>
  5. Why is the Ease Of Movement Indicator important for traders and analysts?

    Read more about the ease of movement indicator, a technical momentum oscillator created by Richard Arms to track price changes ... Read Answer >>
  6. What do the different colored candlesticks mean?

    Candlestick charts have been used in Western trading for many years and are a very popular method of plotting the price action ... Read Answer >>
Hot Definitions
  1. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  2. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  3. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  4. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  5. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
Trading Center