Renko Chart Momentum Breakout Trade Addon Strategy

The Renko chart momentum hook is a trading strategy intended to show momentum continuation after a price retrace.  This is especially important because not only does momentum lead price, but the hook is a primary component in our trade addon setup strategies.

• Renko chart momentum trading begins when momentum reverses direction.
• But the larger trading swings tend to occur when momentum continues in its direction when the price retraces.

When you look at the Renko chart below, you will see the momentum hooks marked as orange boxes on the extreme indicator.  And then, on the chart, the orange circles mark the addon trades – you will remember this Renko trade setup as a midline reject.

What Is A Renko Chart Momentum Hook

When you look at the extreme indicator inside the orange boxes, you will see what I mean by the Renko strategy term: momentum hook.

Be sure to note the extreme indicator ‘shape’ and location for the  momentum hook:

• For downside momentum continuation or a Renko sell addon trade – the hook must break back through the lower momentum extreme
• For upside momentum continuation or a Renko buy addon trade – the hook must break back through the upper momentum extreme

It might not seem logical that we would have momentum continuation with the hook at the extreme, but now consider the following:

• Extreme is a fast momentum indicator
• MEx is a slow momentum indicator
• MEx is flowing in the direction of the trade, while Extreme hooks back in that direction again.

Renko Method Trade Addon Setup

The Renko trading method includes addon trading.  Addon trades enable an increase in the trading size for bigger price moves.  As a result, the addon trade price is often later than the initial trade setup.  Because of this, price and momentum continuation becomes especially important.

When we discussed our method trade setup components, we discussed the midline reject addon and how the Renko chart momentum hook was a trade setup component.

Additionally, when we discussed Renko trade setup filters, the following with included for the midline reject setup:

• Does the trade entry have at least three bricks of room to a price viewed as support or resistance
• Does the trade have momentum [MEx] flow
• Does the trade have a momentum [Extreme] continuation hook

The orange circles on the chart above met the trade setup filter conditions.  These setups are midline reject addon trades.

Renko Chart Momentum Hook Trade Addon Video

When you watch the momentum hook strategy video, there are several things to understand about the momentum indicator:

• First, the momentum hook is a fast indicator that resumes momentum.
• This fast indicator is compared to the slow MEx flow indicator.  This is done to see momentum and price continuation on the retrace.
• This is especially important, considering that the momentum hook is one of the components for our addon trades.
• Comparing four brick midline reject patterns and why one would include a momentum hook and the others wouldn’t.

Click Link To Watch the Video:  Renko Strategy Momentum Hook