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How to Use Renko Bricks and Moving Averages to Find Trades

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by , 05-30-2016 at 02:57 AM (748 Views)
          
   
Renko_v1 - indicator for MetaTrader 5

How to Use Renko Bricks and Moving Averages to Find Trades

  • Renko bars help filter the noise
  • Renko bars reveal clearer entries and exits
  • Moving Averages can be used with Renko bars with some minor setting changes to pinpoint entries

Seeing the trend without Forex market noise is the goal of every trader. Too many times, traders get head-faked by the twists and turns of price action.

In addition moving averages can be used to signal entries and exits as well. A couple of settings have to be changed in order to get the moving averages which are usually tied to time, to work with a chart system that is based on price.

To add a 13-period exponential moving average to the Renko chart, choose EMA from the Add Indicator menu then change “Number of periods” to 13.

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Notice the chart above which displays both Renko bars and a 13-period exponential moving average. A simple system can be built around the Renko bars and the moving average. When Renko price bars cross below the moving average and turns red, traders can enter short and stay with the trend until the Renko bars cross back above the moving average.

An initial stop could be placed just above the last blue Renko brick. Keep in mind that in the above example, each brick is equal to five pips. In the above example, the red circles mark where the Renko bars crossed below the moving average. A trader can see that a number of pips could have been gathered as the bars stayed below the moving average.

On the other hand, when the Renko bars change color and cross above the moving average, traders can enter long placing stop just below the last red Renko brick. The above chart shows in the green circles, points were the Renko price bars moved above the moving average generating a clear buy signal.

Renko charts, without the dimension of time, may take a little getting a little used to. But once you get the hang of them, you may find it difficult to go back to the candles. Adding a moving average gives excellent signals for entry and exit. Marrying them up with other indicators can magnify the benefits of trading without noise and scary wicks!

Renko
- RenkoLiveChart_v1 600+ is here. This version works with Metatrader 4 build 600 and above.
- Renko-SignalAM 600+ indicator is on this post. This version works with Metatrader 4 build 600 and above.

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  1. Lackl's Avatar
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    The chart above belongs not to this article. The link above does.