In markets with limited liquidity, even small trades can cause sharp price movements, making charts appear chaotic and trend detection more difficult. In such environments, traders need tools that can separate meaningful price shifts from random fluctuations. One of the most effective visual tools for this purpose is the Renko Chart.
This article explores how Renko Charts simplify market analysis, why they are particularly useful in low-liquidity conditions, and how traders can configure them for optimal results.
Why Renko Charts Work on Low-Liquidity Markets
Unlike traditional candlestick charts, where each candle represents a specific time interval, Renko Charts focus exclusively on price movement. A new “brick” (or block) appears only when the price moves by a predetermined amount — known as the box size. If price changes are smaller than that range, no new brick is drawn.
Each brick has the same size and represents a directional movement:
- Green (or white) bricks show upward price movement,
- Red (or black) bricks show downward movement.
A sequence of bricks in the same color indicates a continuing trend, while a color change often signals a potential correction or reversal.
The concept is centuries old, originating in Japan, where traders used a similar technique to track rice prices. The modern Renko system gained traction in the late 19th century and became widely adopted in the digital trading era thanks to automated charting software.
The key advantage of Renko Charts is that they completely ignore time. A new brick forms only after a sufficient price movement occurs — whether that takes minutes or days. This approach filters out market “noise” and helps traders focus solely on significant trend shifts.
For low-liquidity assets, where volatility is high and price spikes can occur from relatively small trades, Renko Charts help cut through the visual clutter of traditional candlesticks. They highlight structure, trend direction, consolidation zones, and potential reversal points more clearly.
As altcoins and meme coins gain popularity in 2025 — both known for low liquidity — interest in Renko-based analysis has surged among crypto traders seeking cleaner, more reliable trend signals.
Setting Up Renko Charts for Low-Liquidity Assets
The most important parameter in Renko Charts is the brick size — the minimum price movement required to form a new block. This directly affects chart sensitivity:
- A small box size produces too many bricks, generating excessive noise.
- A large box size smooths out fluctuations but may delay trade signals.
A balanced approach is to set the brick size at 1–2% of the current asset price.
For instance, if a token trades at $10, then a 1% brick equals $0.10 — enough to filter minor fluctuations while still capturing trend changes promptly.
For beginners, it’s best to use automatic settings based on the Average True Range (ATR). This dynamic method adjusts the brick size according to current volatility — expanding during high-volatility phases and contracting when markets calm down.
Another critical parameter is the bid-ask spread. On low-liquidity assets, the brick size should be 2–3 times larger than the average spread to avoid false signals and reflect only significant market moves.
How to Configure Renko Charts on TradingView
To enable the Renko mode in TradingView:
- Select Renko in the chart type menu.
- Right-click the chart and open Settings.
- In the Box size assignment method, choose one of three modes:
- ATR: automatically adjusts box size to volatility;
- Traditional: manual input (for experienced traders);
- Percentage LTP: sets a fixed percentage change to form a new brick.
For example, a 0.5% setting means each new brick forms when the price moves by 0.5% from the previous level.
Once applied, the Renko view produces a much cleaner visual representation compared to candlestick charts, helping traders clearly identify trend direction and market structure.
Trading Strategies with Renko Charts
Renko Charts are particularly effective in trend-following strategies, where the focus is on the overall price direction rather than every minor fluctuation.
A common method is to open positions in the direction of the trend after two or more consecutive bricks of the same color:
- Two or more green bricks may indicate a bullish continuation;
- Two or more red bricks may indicate the start of a bearish phase.
Traders often close positions when a brick color change occurs — signaling a potential reversal or correction.
However, on low-liquidity markets, this strategy should be filtered with additional indicators such as Relative Strength Index (RSI) or Moving Averages (EMA) to reduce false signals. For example:
- If RSI moves above 30 as green bricks form, it confirms bullish momentum.
- If RSI drops below 70 while red bricks appear, bearish pressure may be strengthening.
Crossovers of short- and long-term EMAs (e.g., EMA 20 and EMA 50) can serve as further confirmation of a trend change when aligned with new Renko bricks.
Risk Management and Trade Discipline
When opening trades using Renko Charts, risk management remains crucial:
- Set stop-loss orders below the nearest support (for long positions) or above resistance (for shorts).
- As the trend develops, trail your stop upward or downward to lock in profits.
- Be mindful of price squeezes — sudden jumps where prices skip multiple levels, which are common in low-liquidity environments. Place orders with adequate buffers to prevent slippage.
Keeping a trading journal is highly recommended. Record:
- Entry and exit prices;
- Number of bricks confirming entry;
- Post-exit price reaction;
- Risk-to-reward ratio;
- Notes on trade execution.
Regularly reviewing this data helps fine-tune strategies, identify patterns, and adapt settings for different market conditions.
Case Study: ZKL Token Example
Let’s look at the ZKL token. After a prolonged downtrend, the first green Renko brick appeared in early July 2025. Two additional green bricks followed, signaling a potential entry point around $0.0285.
A protective stop-loss could be set just below entry. As the price advanced, the trader gradually trailed the stop higher. Once two or more red bricks appeared, it was a clear signal to close the trade — around $0.0335, yielding roughly 17% profit without leverage.
Renko Charts are among the most efficient filtering tools in modern technical analysis. By focusing purely on price movement and excluding time, they help traders visualize real market dynamics — free from emotional noise and short-term distortions.
In low-liquidity crypto markets, where volatility and wide spreads often distort candlestick patterns, Renko Charts offer a cleaner and more actionable perspective. Their growing popularity in 2025 reflects the increasing number of traders focusing on altcoins, meme coins, and niche digital assets.
With the right configuration — and when combined with indicators like RSI, EMA, or ATR — Renko Charts can become a powerful component of a disciplined and profitable trading strategy.
