Renko Chart Trade Setup And Entry Timing

My favorite renko chart trade setup continues to be the price envelope midline reject with momentum flow.  Although this is a clear trade setup pattern to see on the renko chart, the trade entry timing takes some getting used to.

For instance, consider a renko sell setup and a red-green-red brick pattern, where the green brick is the midline reject:

  • Do you enter the trade when the renko brick goes from green to red but before it is completed?
  • Do you enter the trade when the red renko brick is completed and starts another red brick?

These trade entry timing questions, along with the renko midline reject trade setup and the related components, are what I want to discuss in this trading video.

Renko Midline Reject Trade Setup Components

Renko Chart Trading Setup Video

The setup components for the renko midline reject trade will be as follows:

  • Price envelope dot shift reverse
  • Midline break with brick color the same as the dot color
    • A sell setup would have the price envelope dots reverse to red on top and the renko brick breaking the midline would be red
    • MEx will have crossed and be moving in the direction of the intended trade
    • There will be a retrace back to the midline and a brick color change
      • But there will be no price envelope reverse
      • And mex will have kept moving in the direction of the trade setup on the retrace
      • The brick will again change colors
        • Red-green-red for a sell
        • Green-red-green for a buy

And whether the trade is entered when the brick color changes but before the brick is actually completed is an important entry timing question.

Renko Trade Setup Entry Timing

Why is the renko trade entry timing and the difference between an uncompleted and a completed brick such an issue?  I will say that trade entry timing will be one of the biggest things to get used to as you would start using the renko charts for trading.

You will remember from the trades discussed in the renko chart trading during consolidation video that I showed my entries after the brick had completed and started as another brick of the same color.

But is this really necessary and can we actually enter earlier during the uncompleted brick?  There are definitely times we can take the earlier entry – but I will say that when it doubt, let the brick complete and become a new brick.

There are a number of reasons for the renko trade entry brick timing issues, along with some entry timing guidelines we can use that are core to our trading method strategies – these include the following:

  • An uncompleted red brick can end up completing as a green brick, just like an uncompleted green brick can end up completing as a red brick
    • The entry price difference if waiting for a completed brick and the impact this may have on the initial partial profit
    • An uncompleted brick entry that is intended as a transition out of consolidation, but the completed brick holds the top or bottom of consolidation
    • Does the trade setup have diagonal breakout potential
    • Does the trade setup show a support or resistance brick being tested
    • Does the trade setup have an additional pattern like a renko brick triple break

Let’s look at some charts and further discuss the renko midline reject trade setup components, along with some of the entry timing guidelines.

And let’s also consider something that is important to study for our renko trade setup entry timing questions – do most partial bricks complete as the same color and become a new brick of the same color?