Renko charts have a pre-determined "Brick Size" that is used to determine when new bricks are added to the chart. If prices move more than the Brick Size above the top (or below the bottom) of the last brick on the chart, a new brick is added in the next chart column. Hollow bricks are added if prices are rising. Black bricks are added if prices are falling. Only one type of brick can be added per time period. Bricks are always with their corners touching and no more than one brick may occupy each chart column.
It's important to note that prices may exceed the top (or bottom) of the current brick. Again, new bricks are only added when prices completely "fill" the brick. For example, for a 5-point chart, if prices rise from 98 to 102, the hollow brick that goes from 95 to 100 is added to the chart BUT the hollow brick that goes from 100 to 105 is NOT DRAWN. The Renko chart will give the impression that prices stopped at 100.
It's also important to remember that Renko charts may not change for several time periods. Prices have to rise or fall "significantly" in order for bricks to be added.
Interpretation
Hollow bricks are bullish, black bricks are bearish – that's the simplest interpretation of Renko charts. Renko charts may be most useful in identifying trends and trend direction. Because they screen out moves that are less than the Brick size, trends are much easier to spot and follow. In order to avoid whiplash periods, some people wait unto 2 or 3 bricks appear in a new direction before taking a position.
Parameters
There are two ways to specify the Brick Size for a Renko chart: Absolute Points and Average True Range (ATR). In addition, you can specify whether closing prices or high/low prices are used.
Absolute Points
With the "Absolute Points" method, you specify the size of each brick on the chart in points. The advantage of this method is that it is very easy to understand and predict when new bricks will appear. The disadvantage is that the point value needs to be different for high priced stocks than for low priced stocks. Typically you will need to choose a value that is roughly 1/20th the average price of the stock during the time frame you want to chart. Common values include 1, 2, 4, and 10.
Important Note: The Default for the "Pts" method is currently 14 which is too large for most stocks. You'll need to change it to a smaller number to get a useful chart.
Average True Range
The "Average True Range (ATR)" method uses the value of the ATR indicator to determine the brick size. The ATR indicator is designed to ignore the normal volatility of a stock and thus it can "automatically" find good brick sizes regardless of the value or volatility of the stock selected. ATR with a value of 14 is the default value for Renko charts and should generate a very usable chart in most cases.
Close Only
High/Low Prices
When using High/Low prices, it's important to note that the rules for drawing Renko charts favor hollow bricks. In other words, regardless of the current direction of the bricks, you first check to see if any new hollow bricks can be added to a chart and, if they can, you then stop without looking at the lows of the day.
Related Readings and Observations
Simple AFL code for 5 EMA(High-Low)
Here the Idea is to design a basic 5 EMA(High-Low) system which could produceBuy/Sell Signals whenever the candle crosses the 5 EMA(High/Low) linesi.e A Buy Signal should […]
Nifty and Bank Nifty charts for 4th April 2011 Trading Nifty in buy mode with support zone coming around 5760-5770 zone and Bank Nifty turned to sell mode on last friday on 90 min charts with resistance coming near to 11700.
Ideal Nifty Trade for 04 Dec 2009
Hold Longs only if nifty opens above 5150. Enter Shorts if Nifty closes below 5096Source:
www.marketcalls.in
Be cautious at these levels: Rakesh Jhunjhunwala Trader and investor Rakesh Jhunjhunwala said the space and speed of the rally has surprised everyone. He is a bit circumspect at these levels because credit conditions in America are not […]
TCS signs 5-yr multi-million dollar partnership deal with ArvinMeritor CMP : Rs 810 March 31,2008 Tata Consultancy Services, a leading IT services, business solutions and outsourcing organization, today announced that it has signed a […]
SBI Introduces Contactless Debit And Credit Cards As SBIinTouch Cards State Bank of India or SBI has finally launched the much waited contactless debit and credit cards, which are termed as SBlinTouch cards. This is manufactured after taking help of latest […]
Dear Rajandran,Is not it just like p & f chart?Regards.
Hi,doing great work……..can u plz post Ashok leyland gannfann chart……..if possible….!!!!!thanks in advance
Hi,doing great work……..can u plz post Ashok leyland gannfann chart……..if possible….!!!!!thanks in advanceabhi
@RMP&F Charts are different from RENKO..though both are used to predict the nature oftrend.
Sir,
Can you post the RENKO AFL?
sam
_SECTION_BEGIN(“Renko Chart”);
// Renko Chart
SetBarsRequired(10000,10000);
// Brick size is dependant on what you want, if too small will not produce a chart due to insufficient x-axis bars
//Brick = LastValue( ATR(100) );
//Brick = LastValue( Max(0.02*C, 0.05) );
Brick = Param( “Brick Size”, 10, 0.01, 50.00, 0.01 );
reverse = 2;
// Convert the closing price to rising and falling rounded bricks
CF = ceil(C/Brick);
CR = floor(C/Brick);
// initialize first element
j = 0;
RKC[j] = CF[0];
RKO[j] = CF[0] + 1;
down[j] = 1; // By default the first bar is a down bar.
up[j] = 0;
// Loop to produce the Renko values in number of bricks
for( i=1; i<BarCount-1; i++ )
{
if( CF[i] <= RKC[j] -- 1 && down[j] ) // Continue down
{
num = RKC[j] -- CF[i];
for( x=1; x= RKC[j] + Reverse && down[j] ) // Change down to up
{
num = CR[i] -- RKC[j];
j++;
up[j] = 1;
down[j] = 0;
RKC[j] = RKC[j-1] + 2;
RKO[j] = RKC[j] -- 1;
for( x=2; x= RKC[j] + 1 && up[j] ) // Continue Up
{
num = CR[i] -- RKC[j];
for( x=1; x<=num; x++ )
{
j++;
Up[j] = 1;
Down[j] = 0;
RKC[j] = RKC[j-1] + 1;
RKO[j] = RKC[j] -- 1;
}
}
else
{
if( CF[i] <= RKC[j] -- Reverse && up[j] ) // Change up to down
{
num = RKC[j] -- CF[i];
j++;
Up[j] = 0;
Down[j] = 1;
RKC[j] = RKC[j-1] -- 2;
RKO[j] = RKC[j] + 1;
for( x=2; x<=num; x++ )
{
j++;
up[j] = 0;
down[j] = 1;
RKC[j] = RKC[j-1] -- 1;
RKO[j] = RKC[j] + 1;
}
}
}
}
}
}
// move the chart to right end of chart space, ie last brick on last bar position
delta = BarCount-1 -- j;
RKC = Ref( RKC, -delta );
RKO = Ref( RKO, -delta );
Up = Ref( Up, -delta );
Down = Ref( Down, -delta );
/*
rC = RKC * Brick;// + (Up-down)*Brick/2;
rO = RC -- (Up-down)*Brick;
rH = Max(rC,rO);
rL = Min(rC,rO);
*/
C = RKC * Brick;// + (Up-down)*Brick/2;
O = C -- (Up-down)*Brick;
H = Max(C,O);
L = Min(C,O);
Plot( C, "", colorGrey50,styleCandle);
// plot chart
//plotOHLC( rO, rH, rL, rC, "Renko Price " , colorBlack, styleCandle);
GraphXSpace=5;
Title = Name() + " -- {{INTERVAL}} {{DATE}} -- Renko Chart : Last Value = " + RKC * Brick + ", Brick Size = " + Brick;
_SECTION_END();
can i get renko chart of nifty &indian stock
how 2 download tgis formula?
Hi,
If i choose ATR, closing price for Renko charts on Nifty, and if the volatility changes and true range changes, will the chart dynamically adjust the brick size??
Halo sir ,
Where can I get renko charts for nifty options?
can you please suggest a link for afl where we can fix brick size as per atr as whatever im getting from net is all fixed increment size and i want atr variable renko afl
regards
Please use the below link to see shares with different points instead of fixed ATR…
http://stockcharts.com/h-sc/ui
I hope it will help
Hi Sir,
Can you please share the renko afl with me?
Regards,
Sangeetha
Hi, if possible, can you please share the platform (free) where I can use Renko chart 60 mins on close basis… As I have used the same on EURUSD… and it works great… But not able to identify the same for Banknifty or shares registered on NSE…
Hi can u please email me the amibroker afl for renko charts.It would be really nice of you.
Thanks
Hello Rajendran,
EOD charts are not working since many days. Can you please check?
The site is awesome and trading community would be indebted for this contribution.
Regards,
Birju
sir can you please share renko chart afl for me ( I am using amibroker 5.4 )
where is formula
DO NOT TRUST RENKO BRICKS IN ANY TYPE OF MARKET VOLATILE OR NORMAL DOESN’T MATTER. BCOZ ITS MAJOR ISSUE IS BACK PAINTING / BRICKS REVERSING / BRICKS DISAPPEAR / REFORMING.. NOBODY SPEAKS DEMERIT OF IT, EVERYBODY SHOWS ONE ASPECT.. WHO WILL TELL NEGATIVE SIDE OF RENKO TO THOSE FELLOW BEGINNERS…
Very good post. Thx. Ravi