Renko Trading Tricks - Making money from few pips

In most of my past articles, I've often used chart patterns with their respective targets. These are usually quite wide and far and sometimes carry the risk of failing to meet the target mid-way.

A different way to trade Renko charts is to exploit the small but certain moves that crop up every now and then on the charts.

Below is the GBPJPY chart. You might recollect the original trade idea here.

GBPJPY - Exploiting Renko Charts

What's unique in this chart, is the break out of the minor ascending triangle, denoted by the brown colored measured levels. While the smaller triangle gives a target to 176.288, before this target is achieved we see a possible resistance at 174.288. Taking a moderately heavy long position targeting this sure level would give some nice fat pips in your pocket.

While trading with the bigger view in mind, a new position exploiting this move would give a good number of pips every now and then.

Update (23/07): And here is how price played out

Result

Importance of multiple confirmations with Renko

This is a great example I came across which shows the importance of using additional confirmations when trading with Renko. Because everything is not as it seems to be.

The chart below is that of EURGBP 10Pip fixed renko.

EURGBP - Renko Example

First, we see a double bottom formation that took quite a while to form, which gives it some weight. This DB's target was to 084741. But price ran up and reversed near 0.83941, which was just a few pips below 150% or half way of the trade.

Maybe an alarm bell should have rang when a lower high was made 0.83841. So perhaps profits could have been booked near the previous low of 0.83541.

Anyways, moving forward, after the failure we now see a broadening triangle pattern being formed. But how do we know its going to hold?

There have been multiple confirmation validating the move to the downside.

First comes the support turned resistance at 0.82841. It also marks the 50% level of the triangle. But that wouldn't have been a signal to short as price didn't break the main support at 0.81741.

Subsequently, another small reversal or lower high was made just below 0.82491 and finally the main support was broken.

Then, we got a confirmation with the support turning resistance at 0.81741. This would be where we would put a pending sell near the reversal low of 0.81441 with stops one or one and half brick above the level of 0.81741 targeting 150% and 200% of the move.

When another small reversal took place near 81241, a break of the reversal low would indicate to move stops to lock in profits as price nears the 150% level.

So what next?

We see a reversal taking place just 10 - 20 pips away from profit. Ideally, this is not a good price level to short from. But existing traders could now move their stops to a better level, maybe one and half bricks above 0.80641 and wait for the final target to be hit.

EURCAD Renko Analysis - Short

EURCAD Renko Chart, Head & Shoulders Pattern

A minor head and shoulders was formed with a retracement from 150% now taking place. There are two possible entries.

• Entry #1 at 1.4964, which marks the support/resistance level previously
• Entry #2 at 1.50405 which is exactly the distance between 200% and 100% (So it should form 2 retracement bricks).

Stops would come in at 1.51937

P.S: That EURAUD short decision to take profit at H&S target was sweet. Price kissed the level and retraced quite strongly.

EURUSD Renko Analysis - Alternate View (Double Bottom Scenario)

Not much of time to publish charts, but from the previous post here, an alternative view would be that of a break of the second ascending triangle. If 1.3526 gives way, the next support comes in at 1.3376.

This sets the tone for a double bottom (if it holds) which gives further upside target to 1.44/1.45

For now, watching!!!

EURAUD: Moving targets to the H&S level at 1.458 if there is a bullish retracement to the downtrend after a tap of this level.

USDJPY Renko Head and Shoulders(ish....)

USDJPY - Head & Shoulders Forming

The left shoulder and head has been formed and price looks steady to form the right shoulder. Ideally a bullish brick at 103.050 will make is ideal to trade the following ways:

1. Short from 103.050, stops at 103.485 and targeting 100.005
2. Short from 101.745, stops at 103.050 and targeting 100.005

The risk/reward varies for both, but ideally, i'd start with a smaller position at the top and build into the trade accordingly.

Bear in mind that this trade set up is valid only when a bullish renko is printed closing at 103.050

AUDJPY Renko Analysis - Inverted H&S

AUDJPY - Head & Shoulders

The neckline comes in at 93.518 which could make it an ideal level to go long from. But the risk comes from the minor retracement of 2 bearish bricks. So an alternative trade would be to pending buy from 96.046 which makes it less attractive.

But if you compare the bricks (4 bricks from 96.406) to target of 98.574, the retracement should ideally stop at 93.518, which makes it 4 bricks down (3 down + 1 reversal).

All in all, this looks like a very neat trade set up.

Natural Gas - June Update

This is an update to my previous post here.

Natural Gas June Update

Price is currently trading at 4.6 after hitting resistance at 4.82. We see a small correction which should be completed soon. During the correction, the retracement reversed at 4.465 which is a minor resistance turned support level. For now, the short term targets come in at 51.190.

GBPJPY - Inverse H&S with Asccending Triangle

In this chart, the inverse head and shoulders hints to a continuation pattern combined along with an ascending triangle just to the right shoulder.

GBPJPY - Inverse H&S + Ascending Triangle

From the chart, with the ascending triangle, the target comes in at 175.368 with stops at 168.94 followed by the larger H&S target of 179.45.

A pending buy order at 172.1 or 171.288 could be ideal.

EURUSD... ECB has to fight a bullish Euro

The EURUSD Renko chart here paints the picture. Lot of things on chart, so let me explain.

EURUSD - Bigger Picture

First there was an ascending triangle (marked in pink) which had a target to 1.3926 which was duly achieved.

Within the journey of this ascending triangle, there was a secondary ascending triangle formed (marked in Black) which targets 1.4176.

However, after hitting the first ascending triangle's target, price formed a small double top at 1.3926 giving a downside target to 1.3526. The neckline of this double top comes at 1.3726.

Possible Scenarios:

• With tomorrow's ECB, we could expect a straight drop to 1.3562
• A retracement to the neckline at 1.3726 is possible, but weak because 1.3651 or 1.3676 could come in as resistance (150% distance of first ascending triangle)
• If a bullish renko is formed at that level, then a short after a bearish renko being printed can see price travel down to the final target of 1.3526.

Once the base is formed at 1.3526, we could see a resurgent rally and validates the secondary ascending triangle (marked by the rising black trendline). But for a safe entry for this kind of set up, we will have to wait for a breakout above 1.3776.

Overall, the bigger target for EURUSD comes in at 1.4176 and within the larger scope of things, EURUSD is quite bullish.

Edit:

The risk to EURUSD is that if the Double top does reach the target, there isn't any considerable bias that support will be found with the only exception of a reversal taking place previously.

Therefore, long positions would be better off either to wait for a break of 1.3776 or wait for price to rally above 1.3726 in order to confirm the support level at 1.3526

NZDUSD - Shaping up for a bigger break out??

NZDUSD has been mostly ranging on the Renko chart but seems to have recently broken out of it. Price looks to be retracing to find support at the breakout of 0.8364.

NZDUSD - Renko

While its hard to explain the levels, a buy order at 0.83334 with stops at 0.80765 targeting 0.9336 should be a good trade with +ve swaps along the way. It might take a very long time... perhaps Q3 of 2014 for this trade to be done with, so patience is essential.

GBPAUD - Head & Shoulders Follow Up

From the previous post, we find a strong resistance at 1.8182 with a small double top formation set in place followed by a bearish renko block opening. Therefore, we can assume that the retracement is complete, which coincides with the neckline (left side).

GBPAUD - Renko, Head & Shoulders Continuation

There are a couple of price levels to bear in mind.

• The H&S target comes to 1.7642, which makes it the first target.
• The retracement which we saw from 1.775 gives a further downside target to 1.7462 if 1.775 is broken and confirmed with a bearish renko block printed.

For now, continue to hold on to the shorts.

CADJPY - Follow up to Long trade

This is a continuation of my previous post here.

After a few hiccups, price seems to be slowly treading along to the upside. The target is towards 95.536, which seems to be a very deep correction to the actual downtrend. Nothing much has changed to the analysis, I just added the Median Line to gain perspective.

CADJPY - Renko Chart, Long Position

An alternate view from ATR's Renko settings shows a double bottom that was just broken upwards, targeting 95.6.

Bullish CADJPY, Alternate View

EURAUD - Head & Shoulders in Play

Continuation through to H&S target of 1.458. The minor retracement gives a further downside target to 1.44 (rounded off)

EURAUD - Renko Charts, Head & Shoulders

Edit:

What seems to be a double bottom could pose some risks. If the double bottom is true, then we could see price rally up to 1.52165 (one brick above the neckline of the H&S) before dropping further.

EURAUD - Double Bottom Risk

So for existing short positions from the neckline, it would be ideal to move stops down to 1.495 (with the risk of giving away some pips but giving enough room to the downside).

New short positions could see their stops coming in at 1.495 and perhaps scale out if a bullish renko is posted closing at 1.4765.