Time and Bricks

The Silent Doji

When trying Renko charts, many traders will watch the charts and see that nothing seems to be happening. The Renko chart bricks have not moved. Often, when seeing this, the trader believes something is wrong. This is not an error in the feed. It represents hesitation. The sentiment is not able to register a change. We can call this pause in the Renko charts bricks a silent Doji. The trader, upon sensing the silence, should

At

Da

nD,r

f

n 1

i

dd

_

j

n

n

„D.

_fi

oDI

\

1

n Ji_

F

\

\

nQ

J

1

1

f

]

Figure 8.15 U.S. Crude Oil: Renko Block .25, Interval Ten Minutes

Source: Chart copyright www.ProRealTime.com

Figure 8.15 U.S. Crude Oil: Renko Block .25, Interval Ten Minutes

Source: Chart copyright www.ProRealTime.com

Figure 8.16 U.S. Crude Oil: Renko Block 0.10, Interval One Minute

Source: Chart copyright www.ProRealTime.com

51.2 51

50.8

50.6

50.4

50.2

49.8

49.6

49.4

49.2

Figure 8.16 U.S. Crude Oil: Renko Block 0.10, Interval One Minute

Source: Chart copyright www.ProRealTime.com

be on alert that a movement could occur at any second. However, a silent Doji does not have to be silent at all. Programmers can build in an alarm that scans the duration of no movement in the Renko chart bricks and sets off an alarm alerting the trader.

Bricks per Minute or Bricks per Tick

A useful observation to quantify the change in sentiment is the measure of bricks per minute. Platforms showing Renko should provide this data. Since Renko charts only add or subtract another brick when the price has closed with the specified setting distance, Renko charts provide a very good visual track of sentiment momentum. Logically, the faster bricks are added to the charts, the stronger the momentum. A shift in bricks per minute is a leading indicator of momentum changes in the

L

0 \

\

v

jl

V.

v

1

\

\

3

f

Figure 8.17 Renko Bricks Show Change in Momentum

Source: Chart copyright www.ProRealTime.com

Figure 8.17 Renko Bricks Show Change in Momentum

Source: Chart copyright www.ProRealTime.com

sentiment. Such a change in momentum in Renko bricks is apparent in the chart in Figure 8.17.

In some markets, the trader can go to an even smaller setting, such as ticks. Ticks are the actual trades going through the platform, and provide an accurate surrogate for volume. Settings of 50 and 89 ticks should be compared to a setting of one minute. If the tick settings result in very choppy Renko bricks, the trader should adjust upward to smooth out the choppiness. Often, even at tick levels, we can detect patterns showing the dominance of bullish or bearish sentiment.

0 0

Post a comment