Renko Candles Overlay

The Renko Candles Overlay indicator projects Renko price action directly onto the standard candlestick chart to help traders identify trends and reversals without time-based noise. By smoothing price movements through various scaling methods, the tool provides a clearer view of market structure and support/resistance levels.

Usage

The Usage section describes how the script can be used, particularly in identifying trend shifts and key price levels.

• Trend Identification: The indicator colors the Renko bricks based on price direction. A sequence of up-bricks suggests a bullish trend, while down-bricks suggest a bearish trend.
• Dynamic Scaling: Users can choose how brick sizes are calculated. Options like ATR (Average True Range) allow the bricks to adapt to market volatility, whereas Traditional settings use a fixed point value.
• Unconfirmed Bricks: In real-time, the indicator displays "unconfirmed" bricks in a distinct color (defaulting to gray). These represent potential price movements that have not yet closed or finalized based on the current price action.
• Breakout Levels: The tool can plot horizontal lines and labels indicating the exact price levels required to form the next bullish or bearish brick, assisting in breakout trading strategies.

Details

The script constructs Renko bricks by filtering out price fluctuations that do not meet a specific size requirement (the "Brick Size"). Unlike standard Renko charts that replace time-based candles, this overlay draws boxes on the existing chart.

The calculation logic handles trend reversals by requiring price to move twice the brick size in the opposite direction. If a dynamic scaling method (like Percentage or ATR) is selected, the box size is updated when new bricks are added, meaning box sizes may vary over the history of the chart to reflect changing volatility. The overlay is optimized to display approximately 280 bricks to maintain chart performance and visual clarity.

Settings

SETUP

• Method: Determines the brick scaling calculation. Options include Traditional (fixed size), ATR, ATR/2, ATR/4, and Percentage.
• Atr Period: Sets the lookback period for the Average True Range if an ATR method is selected.
• Brick Size: The fixed point/price value used when the "Traditional" method is selected.
• Percentage %: The percentage of the current price used to determine brick size when the "Percentage" method is selected.
• Number of Bricks: Controls the maximum number of bricks displayed on the chart (up to 280).
• Levels & Lines for new Bricks: Toggles the display of horizontal lines and labels for the next brick thresholds.
• Line Style: Sets the visual style (dashed, dotted, or solid) for the threshold lines.

BRICKS

• Color Up/Down: Sets the fill colors for bullish and bearish bricks.
• Unconfirmed: Sets the fill color for bricks that are currently forming in real-time.
• Width: Adjusts the visual width of the Renko bricks on the chart.

BORDERS

• Color Up/Down: Sets the border colors for bullish and bearish bricks.
• Width: Adjusts the thickness of the brick borders.

CANDLES

• Change Bar Color: When enabled, this will override the standard chart candlestick colors to match the current Renko trend.
• Color Up/Down: Sets the colors used for the chart candlesticks when "Change Bar Color" is active.

FAQ

How do the ATR-based brick sizes work? The ATR methods calculate the Average True Range over a specified period and use that value (or a fraction of it) as the brick size. This allows the Renko bricks to expand during high volatility and contract during low volatility.

Why are some bricks a different color (Gray) in real-time? These are "Unconfirmed" bricks. Because Renko bricks are based solely on price movement, a brick might appear temporarily as price moves, but it is only "confirmed" once the price reaches the full brick threshold.

How can I access the Renko Candles Overlay? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.