Renko Chart Pattern Breakout Trading Strategies Benefits

Renko chart pattern breakout strategies add another dimension to Renko chart trading on top of what we get from our ‘base’ method setups.

Typically, we determine if a Renko setup can be traded by how many bricks of room we have to price.  If there aren’t 3+ bricks then we consider the setup filtered for the price and won’t trade it.

However, there are breakout patterns that tend to lead to price continuation – and thus provide high odds trade entries that increase trading profits.

Renko Pattern Breakout Strategies Benefits

Besides leading to Renko trades that might not otherwise be taken, what other trading benefits could Renko chart pattern breakout strategies provide?

Think about this question in the context that a pattern breakout setup leads to price continuation then it is a higher odds trade:

  • What if you were a 2-3 contract trader – would you at the higher odds of a price pattern breakout strategy to trade the bigger size?
  • What if you were an addon trader but only traded 1 addon in a given swing – would you look at the higher odds of a price pattern breakout strategy to do an additional addon?

I would answer these questions as yes, these would be profitable ways to benefit further from these trading strategies.

Renko Chart Pattern Breakout Setup

On this chart, I have squares drawn around 2 potential Renko price pattern setups, but as far as being tradeable strategies they are completely different. Click the link to compare the pattern breakout trade to our Renko base trade setups.

Renko Chart Pattern Breakout Strategies

The trading pattern strategy for a sell breakout consists of the following:

  • Price test that can’t be traded, because there are less than 3 bricks of room to the price and is considered to be a filtered or avoided trade
    • This is most clear at the left blue square on the top trading line – if this wasn’t a price filtered setup then there would be a short on the price envelope reverse
    • You can compare this to yellow circle1, which is a price envelope reverse buy that was done
  • Two price tests of the line, with a lower brick high for a sell pattern setup
    • Slow momentum [blue-purple line] must continue to flow down on the retraces or counter bricks
    • Fast momentum [yellow line] must break above the lower extreme on the counter brick and then break or hook back below on the directional brick
  • Sell the yellow square triple break of the line – this is the breakout and entry for the short Renko price pattern breakout trade

Compare The Yellow Square To The Blue Square

Now compare the yellow square and blue square – do you see the same price pattern setup and trade entry?

  • Price test at line and left blue square – Note that this wasn’t an actual trading price, but I want it there for comparison
    • This is not the price envelope reverse, so if this is a tradeable setup then it would be a sell addon at the blue square
  • There are 2 brick lows at the blue square setting up the triple break pattern breakout
    • But there is no flow to slow momentum, it has actually cross and the lines are essentially on top of each other – compare this to the momentum flow on the yellow square sell pattern setup
    • There is no acceptable fast momentum hook, meaning it has almost retraced to the upper extreme and back down, where we want the retrace to go back to the middle of the range – again compare this to the momentum hook for the yellow square sell pattern setup
  • Do not sell the blue square, because regardless of whether this price existed – this would not be a breakout pattern trade entry

Renko Chart Pattern Breakout Continuation

As mentioned above, the benefit of this pattern breakout trade setup is price continuation after the break.

You can clearly see how the top gray line acts as price support and then how continuation came after the breakout.  And in this case, yellow circle2 was an addon to the yellow square initial trade – with continuation back to the buy swing low.

The lower brick high triple break, with both slow momentum flow and a fast momentum hook, is not our only Renko pattern breakout trading strategy. But it is certainly one of my favorites – it is a high odds trade that leads to price continuation and additional trading profitability.

You can watch the video, for a further discussion and different trading scenarios for the chart above.

Click link to watch video:  Renko Chart Trading Pattern Breakout Strategies

 

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