A step-by-step guide to setting up and interpreting Renko Charts in MT4 using the OANDA Renko Chart indicator for trend analysis.
Developed in Japan, Renko charts are designed to filter out market noise, making it easier to identify the overall direction of price trends.
Unlike time-based charts, it is a non-time-series chart similar to point and figure charts.
The OANDA Renko Chart is an indicator that displays Renko blocks overlaid on time-based MT4 candlestick charts.
By overlaying a time-based candlestick chart with a non-time-based chart, you can identify broader price trends while simultaneously monitoring detailed price action through candlesticks.
Reading a Renko Chart
Two key parameters must be configured before you start using a Renko Chart:
- The number of pips per block
- The number of blocks in the opposite direction required for a reversal
For example, if each block represents 10 pips and a reversal is set as a movement of 2 blocks in the opposite direction, the chart will draw a new block of the same colour every time the price moves 10 pips in the same direction.
If the price instead moves 20 pips in the opposite direction, the chart will draw a new block in a different colour.
With Renko Charts, when blocks of the same colour continue, the market is considered to be in a trending phase.
Conversely, frequent colour changes suggest a market lacking clear direction - something you can grasp at a glance.
The above example shows a Renko Chart overlaid on a time-series candlestick chart.
Setting up the OANDA Renko Chart
The following input parameters can be customised:
| Variable | Default value | Consideration |
|---|---|---|
| Renko block size (in pips) | 10.0 | Specify the number of pips per block. |
| Symbol pip size (0 for default) | 0.0 | For FX CFDs trading, select 0. |
| Colour for up blocks | Blue | Choose the colour for bullish price movements. |
| Colour for down blocks | Red | Choose the colour for bearish price movements. |
| Draw blocks as continuous | Yes | Select “Yes” to display blocks even when there is no price movement.Select “No” to display Renko blocks only during periods of price activity. |
| Target lines for next block | Dash | Choose the type of line to show the level at which the next block will appear. |
| Draw on top of the chart | No | Select “Yes” to overlay the Renko Chart on top of the candlestick bars. |
| Alerts on new blocks | No | Select “Yes” to receive an alert when a new block is created. |
| Round the starting price | Yes | Select “Yes” to round the starting price. For example, if the block size is 10 pips, the starting price is rounded to the nearest 10-pip increment. |
| Reversal factor (2 = Renko, 1 = range) | 2.0 | Set the number of blocks required for a trend reversal. By default, a reversal occurs when price moves two blocks in the opposite direction. |
| Maximum historic blocks | 1000 | Set the maximum number of past blocks to display. |
| Build Renko data from the historical period | M1 | Choose the timeframe from which the closing prices are used to construct the Renko blocks. A longer timeframe reduces noise, but delays the appearance of trend changes on the Renko Chart. |
| Create an offline Chart Period | 0 | You can also display the Renko Chart as an offline chart by entering a unique number in the “Value” column. Note that the number cannot be the same as MT4’s standard chart timeframes (1, 5, 15, 30, 60, 240, 1440, 10080, 43200). |
| Update the offline chart with each tick | Yes | Select “Yes” if you want the chart to update with each new price tick. |
| Show “tails” on Renko Bars | No | Choose whether to display wicks on the standard Renko Chart. |
- Enter a number in the “Create offline chart period” field and click “OK”. (Example: 1234)
From the menu bar, select the “Offline Chart” list and find the chart with the unique number you entered. Click to open it.
- The standard Renko Chart will be displayed.
