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Most traders start with candlestick charts, but few take the time to understand Renko charts. Once you understand how Renko works, you'll realize why many trend traders use it to filter market noise and stay focused on the bigger move.
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Candlestick vs Renko
The biggest difference is simple:
Candlesticks are based on time.
A new candle forms every minute, hour, or day depending on your timeframe.
Renko is based on price movement.
A new brick only forms when price moves a certain amount. Time doesn't matter.
This means Renko ignores small fluctuations and focuses only on meaningful price movement.
Example
Let's say the brick size is $100.
Price starts at $1,000.
Price moves to $1,090 → No new brick.
Price moves to $1,100 → One green brick forms.
Price moves to $1,200 → Another green brick forms.
Price drops to $1,110 → No red brick.
Price drops to $1,000 → One red brick forms.
Notice how Renko ignores the small movements and only reacts when price moves enough to create a new brick.
This is why trends often look much cleaner on Renko than on candlestick charts.
Advantages of Renko
✅ Removes market noise
✅ Makes trends easier to identify
✅ Helps traders stay in winning trades longer
✅ Reduces emotional decision-making
✅ Great for trend-following strategies
Disadvantages of Renko
❌ Doesn't show detailed price action
❌ Can react late during sudden reversals
❌ Not ideal for very short-term scalping
❌ Different brick sizes can produce different signals
How I Analyze Renko Charts
When I open a Renko chart, I focus on three things:
1. Trend Direction
A series of green bricks indicates bullish momentum.
A series of red bricks indicates bearish momentum.
The longer the sequence, the stronger the trend.
2. Reversal Signals
The first opposite-colored brick after a strong trend can signal a possible reversal.
However, I never trade based on a single brick alone.
3. Volume Confirmation
A breakout supported by rising volume has a much higher probability of continuing.
Volume is still one of the most important confirmations, even when using Renko.
My Favorite Renko Strategies
Strategy 1: Renko + 200 EMA
Buy:
Price above the 200 EMA
First green brick after a pullback
Sell:
First red brick after momentum weakens
This keeps you trading with the larger trend.
Strategy 2: Renko + Supertrend
Buy:
Supertrend turns green
New green brick forms
Sell:
Supertrend turns red
New red brick forms
This is one of the cleanest trend-following systems for crypto.
Strategy 3: Renko Breakout
Look for:
Sideways consolidation
Tight brick formation
Strong breakout with volume
Enter when price breaks the range and forms a new brick in the breakout direction.
Choosing the Right Brick Size
The brick size is extremely important.
Too small:
More signals
More fake breakouts
Too large:
Cleaner trends
Late entries
For most crypto traders, ATR-based Renko works well because the brick size automatically adjusts to market volatility.
Final Thoughts
Candlestick charts tell you everything that's happening. Renko charts tell you what matters.
Neither is better than the other. They simply serve different purposes.
If your goal is to identify trends, reduce noise, and stay focused on the bigger move, Renko can become a powerful addition to your trading toolkit.
The best traders don't rely on one chart type. They understand the strengths and weaknesses of both and use them together to make better decisions.
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