Renko Charts

I stumbled upon Renko charts when I was checking out the VT Trader platform.  I don’t if would use them for but they certainly are interesting for their simplicity. 

Renko charts, as the name suggests, were invented by the Japanese and are constructed by placing either a white or black brick in the next column once the price surpasses the top or bottom of the previous brick by a pre-defined amount.  White bricks are used for an uptrend and black for a downtrend. 

Renko charts are just another way of representing price changes.  They are quite superior in displaying the trend when it may not be as obvious pictorially on a candlestick chart. 

Here is a renko chart and a candlestick chart for the USD/JPY using identical time periods (click the picture for full-size):

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