named for the Japanese word for bricks, "renga". . 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. 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. Getting started with renko charts trading.
Since the Renko chart is a forex master trader trend following technique, there are times when Renko charts produce whipsaws, giving signals near the end of short-lived trends. This type of chart is very effective for traders to identify key support/resistance levels. Basic trend reversals are signaled with the emergence of a red or green box/brick. Transaction signals are generated when the direction of the trend changes and the bricks alternate colors. Renko charts are also very effective at identifying key support or resistance levels. A new red brick indicates the beginning of a new downtrend. In the picture Renko chart forex system in action. 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.