Renko Chart Trade Setup 4 Brick Entry Pattern

This emini dow day trading training video, will be a renko chart trade setup and review.  And we are going to start by talking about a potential trade setup that has a 4 brick pattern, and discuss adding this to our renko base trade setup.

Additionally, the video will discuss trade setup filtering for price and momentum, along with a renko consolidation breakout setup.

Renko Trade Setup 4 Brick Pattern

Price envelope reverse and multiple brick move without a setup.  We have now retraced back to the midline and have a reject brick and reversal brick, with mex flow – is this a renko base trade setup?

  • Your immediate answer may be no, because there is a 4 brick pattern instead of 3
  • I want to include 4 brick patterns like this as a base setup – but I want to make some additional notes about trading the pattern
    • When you chart read for what is happening, you can see that the price envelope reverse then retrace, comes from a test of previous resistance as support price
    • My concern from this point is that the next brick[s] are green and start a resumption of the left side buy swing – especially considering that it is testing support.
    • So, for a renko chart entry, I want to see another red brick breaking the yellow-blue line

And be sure to look at your 180 tick chart for the relevant price that was tested and needs to fail for continuation

  • The yellow price line is what is being tested when the blue line hits and rejects
  • Red dot sell:  In this case I want to be sure that my trade entry is a failure of the yellow line-using the blue line break2 for entry
    • And we have that situation with the initial price break of 15384-15379 to 15378
    • Sell the 15384 price break2 after the retrace bar with mex flow would probably fill 15382
      • 15382 was the renko price – and I still decided to wait for the next renko brick and entered the trade at 15380, but I probably didn’t have to

The main point is use the 4 brick entry pattern and another confirming brick, unless you have a situation on your 180 tick chart where you have a clear price failure entry to use without waiting

The partial target is 15362 which syncs with price on the 180 tick chart

  • With mex still flowing at the first hit of the target, which is only 18 points, I held off – and then at the 2nd hit I went ahead and took a 15364 partial
    • This partial was 16 points and smaller than my typical partial, especially with the expanded partials – but price is price, and this amount was accept when the trade was taken
    • Management now becomes about wanting to keep a winning trade from becoming a loser and trying to hold the breakeven area – with 3 contracts unit size, there are 2 trailers against only 1 partial
      • Price does go lower and now I want hold the 15362 area – it’s apparent that the chart would reverse around there, so the trade would exit as a winner if that happens
      • Do not trail anything back to breakeven – be sure to adjust your profit trails as key price points break and your trade progresses further
  • Question:  Do you see a sell addon alert, with the same 4 brick pattern as the initial trade?

Renko 4 Brick Addon Trade Setup

Renko 4 Brick Addon Trade Setup

Yes, it’s the same pattern, but I can’t do a trade against the mex extreme cross – and this is also support and the next profit target.

  • Since this is a momentum extreme mex cross at support, an addon would be read as being into a pmd low
  • And instead became another partial
    • Actual price was 15348 and the renko brick price was 15346 – price went to 15345 and filled a 15347 partial

The addon would have worked fine and I would have definitely liked to have it, because now on another 26 point move down I don’t have a partial to take based on 3 contract trades

  • If I did the addon partial1 would have been taken on the last green brick of the chart
  • The blue line is next support and management becomes a risk reward question – how much give back are you willing to incur before going to another target 12 points away from this swing low
    • At this point I am going to hold with the price envelope, which is actually more giveback than the distance to the target
    • But we could always go to support and not reverse
    • These last contract management decisions are very difficult

Renko Chart Consolidation Breakout Trade Setup

Renko Chart Consolidation Breakout Trade Setup

The price envelope always holds, and when we went down again I moved my trail above the green brick at the purple square

  • We actually went to a support test pmd low and consolidated
    • For management at this point and how profitable the trade has become – I would have no issue with anyone going flat after the pmd
    • I decided to hold inside of consolidation, ignoring the price envelope reverse and instead watch the consolidation high that held as a double top
  • We continued to consolidate, without being able to break through the 15310 support – but look at the formation that developed
    • 15310 double bottom followed by a lower high midline reject
    • We have our red-green-red brick pattern and the midline reject is with mex flow – and we also have a triple bottom breakout
    • Sell the yellow dot as an addon at 15308 as a consolidation and support failure break
      • Partial 1 was taken at 15288 after the green brick midline break
  • NOTE:  Addons are important to be able to continue taking partials after only having 1 contract left
    • And as I have mentioned before, I am fine if someone does a 1 contract addon to be able to partial and continue trailing the initial
    • Also don’t take the attitude that price has gone too far to do an addon
      • This trade is at 15308 and got a 20 tick partial – the initial trade was at 15380 and only got a 16 point partial
      • When these big extended moves continue break through support or resistance, with momentum builds and breakouts – they often continue to accelerate the move
  • Short 1 unit of 15380 and 2 units of the 15308 addon
    • Watching for the price envelope reverse to exit the addon if we don’t get continuation down – and then give the initial a couple more bricks of room
    • I don’t want to hold for a 15310 test from this point – I would rather be flat and if it then goes there, look for a reject resumption setup