Renko chart trading price lines should be marked on your chart. These should be a relevant trading price that is significant to the chart, like a daily high or low, or a double bottom or double top. Or a diagonal price like a trend line or chart pattern.
Why mark your chart with these trading prices?
Because the horizontal Renko chart trading price lines will act as support or resistance, and it is important to avoid trading directly into them. Considering the technical analysis concept of a support or resistance price, these lines typically hold and reject when tested instead of breaking out.
On the other hand, the diagonal trend lines and chart patterns tend to breakout with continuation.
Using Trading Price As Filters Or Setups
As a result, we do not have trade setups based on Renko chart trading price breakouts. We avoid taking trades like this, since we do not anticipate that there would be a price breakout with continuation.
In our Renko chart trading method, we use trading price support and resistance as trade setup filters – meaning we will not take a trade, unless there are at least 3 Renko bricks of room to the price.
However, trend line and chart pattern breakouts are Renko trading strategy setups. Our method thinks of these setups as having diagonal breakout potential that often can be used for increasing the size of a trade profit.
Renko Chart Trading Price Lines – Horizontal -vs- Diagonal
When I look at other traders’ charts, I typically do see the horizontal Renko chart trading price lines marked on them – and sometimes far more than is useful, because they can’t all be relevant.
But the prices that I don’t tend to see are the diagonal lines like trend lines or pattern lines.
Not only are these trading prices significant to the chart technicals, they are also very useful as trade setup components. This is because, while horizontal support and resistance price lines tend to hold, the diagonal trend lines often breakout and continue.
I think of this as diagonal breakout potential that leads to price ease of movement, which is a very important concept for our Renko chart trading method.
Renko Trading Price Lines Chart Review
Look at this Renko trading chart, you can see:
- 3 horizontal Renko chart trading price lines
- The bottom 2 lines were previous high price breakouts that are now significant as support
- The top line is the new higher high and remains resistance
- Diagonal trend line [purple line] that has significance because it is a 3 point line
- Trading pattern that includes a diagonal line [blue lines] – this is a bear wedge
All of the trades marked on this chart will be talked about in the Renko trading price video for further discussion of the trading method.
But for now let’s look at the trade setups related to the horizontal price lines. How were these trades affected by using the Renko trading prices as filters – were there price breakouts with continuation, or price rejects that were losing trades avoided:
- Blue circle1 was an entry without 3 bricks of room to resistance so no trade was done – there was a trading price breakout so a winning trade was missed
- Blue circle2-3-4-5 were 4 trades that were all price filtered for support or resistance – there was no trading price breakout and 4 losing trades were avoided, which was a bigger loss than the one winning trade
Now look at the diagonal price breakout trade setups:
- Yellow circle2 was traded as a diagonal breakout -vs- filtered for horizontal support – the diagonal trend line did breakout and was a winning trade
- Yellow circle3 was traded as a bear wedge breakout -vs- filtered for support at the consolidation low – the diagonal price line in the bear wedge pattern did breakout and was a winning trade, as you can see in the chart below
- Yellow circle5 was a Renko price envelope reverse – but unlike the blue circle setups discussed above that were price filtered, this trade setup has 3+ bricks of room to resistance
- And talk about diagonal breakout potential, look at what happens when the resistance price didn’t hold and the trade continued though the rest of the diagonal made from the bear wedge
Renko chart trading price lines are important to locate for our method to use as trade setup filters that might cause a winning trade to be missed, but typically avoid more losing trades.
But don’t only mark the charts with the horizontal price lines. The Renko chart diagonal prices and patterns are used as trade setups, which often breakout with continuation, and become winning trades.
Click link to watch video: Renko Trading Price Breakout And Continuation