Renko chart
File:Renko chart example.png market for EUR/USD pair]]
A Renko chart{{Cite book|url=https://books.google.com/books?id=EirI-2m3tj4C&q=renko+chart&pg=PA199|title=Beyond Candlesticks: New Japanese Charting Techniques Revealed|last=Nison|first=Steve|date=1994-11-10|publisher=John Wiley & Sons|isbn=9780471007203|language=en}} ({{Langx|ja|練行足|links=|translit=renkōashi}}, also written {{lang|ja|練り足}} {{Transliteration|ja|Hepburn|neriashi}}) is a type of financial chart of Japanese origin used in technical analysis that measures and plots price changes. A renko chart consists of {{Nihongo|bricks|煉瓦|renga}}, which proponents say more clearly show market trends and increase the signal-to-noise ratio compared to typical candlestick charts.{{Cite web|url=https://www.investopedia.com/terms/r/renkochart.asp|title=Renko Chart Definition and Uses|last=Mitchell|first=Cory|website=Investopedia|language=en|access-date=2019-09-23}}
Construction
Renko charting is similar to point-and-figure in that time does not play a role in Renko charts. Renko blocks (or bricks) are plotted using the following rules:{{Cite web|url=https://www.thebalance.com/technical-analysis-renko-chart-basics-1031113|title=How to Use Renko Charts in Your Trading|last=Mitchell|first=Cory|website=The Balance|language=en|access-date=2019-09-23}}
- A brick size is determined, e.g. 10 points. All bricks are drawn to be of that size.
- Once the price surpasses the lower or upper border of the current brick by the brick size, a new brick is drawn either above or below the previous one, but never on the same line.
- The new brick is always drawn further to the right on the horizontal axis.
- If the price surpasses the previous brick by more than one chosen size, the respective number of bricks is plotted on the chart.
- Partial bricks are not plotted until complete brick size distance is covered by the price.
- Renko charts typically only use closing prices based on the chart time frame chosen. For example, if using a weekly time frame, then weekly closing prices will be used to construct the bricks.
Similarly to Kagi charts, Renko charts help chartists to cancel out the noise present on time-based charts, focus on important price levels, detect support and resistance, and identify market trends.{{Cite web|url=https://school.stockcharts.com/doku.php?id=chart_analysis:renko|title=Renko Charts [ChartSchool]|website=school.stockcharts.com|access-date=2019-09-23}}