Ranco is one of the non-standard graphs used in technical analysis. It consists of vertical black and white rectangles. Each new brick arises after the next price change. Hollow rectangles say about the decline in the value of the asset. Filled bricks indicate a rise in the price of a financial instrument.
It is important to understand that each rectangle can include an indefinite number of periods. This chart has a special difference – it concentrates on a significant price movement. In this case, the time factor is ignored.
Traders should decide on two parameters. The first is the length of the field. This definition represents the amount of price change at which a new brick appears on the chart. This parameter depends on the ATR indicator or is an absolute value. When working with a cost guide, you should understand that Renko is based on highs and lows or on the closing price.
The main advantage of Renko is the ability to work effectively with trends. In combination with other methods, it is an excellent analytical tool. Analyzing Renko candles, a trader always knows when to sell and when to buy.