The Renko chart momentum hook is a trading strategy that is 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.
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
Addon trading is important for our Renko trading method, as it will enable us to have bigger trading size for the bigger price moves. But that being said, an addon trade may also be entered at a later price than the initial trade – and thus price and momentum continuation become additionally important.
When we discussed our method trade setup components, we discussed the midline reject addon and how the Renko chart momentum hook was a component of the trade.
Additionally, when we discussed Renko trade setup filters, the following with included for the midline reject setup:
- Does the trade entry have at least 3 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
As will be discussed in the video, all of the orange circles on the chart above meet the trade setup filter conditions, and were traded as midline reject addon trades.
Renko Chart Momentum Hook Trade Addon Video
When you watch the momentum hook strategy video, there are a number of things to understand:
- The momentum hook is done with a fast indicator
- Since this is a fast indicator, it must be compared to MEx flow at the time to show momentum and price continuation
- This is especially important, considering that the momentum hook is one of the components for our addon trades
- Comparing 4 brick midline reject patterns and why one would include a momentum hook and the other wouldn’t
Click Link To Watch Video: Renko Strategy Momentum Hook