In the recent volatile weeks, I have been using the Renko chart to help remove some of the wild swings out of the charts. As can be seen from the chart below, we have been trading within a chaneel for over a week, and today we broke below it.

Although the news has been mixed, some say bullish, which took us above $50 for Brent Crude Oil this week, we were not able to hold above that price. One key reason could be the OPEC meeting on Monday, and their response to today’s report showing a rise in production. Many of those who have been long over the past couple of weeks will be looking to take profits around $50, and also exit positions before the weekend.

Petro-logisitcs, which tracks OPEC supply forecasts, said crude oil production would rise by 145,000 barrels per day this month. This rise, despite the group’s pledge to curb output, could reignite concerns that there is still a substanital over-supply issue.

Over the past week and more, crude oil has been moving in an upward channel. Today it broke below

Renko channels are useful to smooth out noise, as they only plot a new ‘brick’ when price moves above or below the limits of the previous brick. This means it is possible to set how much the market needs to move, before a new ‘brick’ is plotted.

It can be useful, in some circumstances, to focus on a renko chart, to avoid watching every tiny move of the market, filtering out only the larger directional moves.

About the author

Trading and Investment

Traded the markets for over 15 years, including Commodities, Bonds, Currencies, Equities, and Indices. I have also worked as a Chartered Financial Planner.
CeMAP, CeFA, DipFA, AdvDipFA, Ba(Hons) Economics, Chartered ALIBF

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