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.