Renko brick construction and breakout rules

Bricks come from closing prices only

A Renko chart is a close-only brick chart that plots fixed-size boxes at 45-degree steps so trend direction stays in force until a reversal brick forms. Bricks are built from closing prices only. Each finished brick keeps its color and 45-degree placement until a later close creates the next brick.

A new brick is never drawn beside the last one. It is always stepped at a plus or minus 45-degree angle, and its size is not later resized or deleted. Box size is the fixed brick height that sets how much close-to-close movement is required before a new brick is drawn.

Leftover movement is ignored

On a five-point daily brick, a 16-point up close prints three up bricks, while a nine-point down close prints only one down brick because leftover movement below one full box is ignored.

Smaller boxes create more bricks and more color flips. Larger boxes delay entries because more close-to-close travel is required before a brick or reversal appears. A whipsaw is a short sequence of color flips that appears more often when the box is small relative to typical closes.

Box size on daily and intraday charts

Daily-chart box sizing is described with a 1% minimum of price. Intraday examples include a $0.10 box on a five-minute chart for $10 to $20 stocks and $0.25 to $0.50 boxes for higher-priced names.

On a typical session, a one-point Renko of the emini Russell 2000 compressed a five-minute bar series of 81 bars to about 17 to 35 bricks. One illustrated day printed nine one-point bricks against those 81 bars.

The reversal box needs three box sizes

An upside reversal needs a close below the bottom of the last green brick, so the distance from that brick's top to the new reversal brick's bottom equals three box sizes.

The reversal box is the first brick of the opposite color. In an uptrend it needs a close beyond the prior brick's opposite edge, so the gap from green top to new red bottom is three box sizes.

Color change, shelves, and continuation

A color change from green to red or red to green is the chart's reversal and breakout cue. A breakout is a brick-color change or a move that leaves a prior consolidation and continues in the new trend direction. The same bricks are also used to read major trend, support-resistance shelves, and post-consolidation continuation.

Support and resistance are price shelves that appear as repeated brick highs, lows, or consolidation bands once noise is stripped from the series.

In the illustrated sequence, a failed long after a reversal, a consolidation against prior structure, and a later breakout continuation show how color flips, support-resistance, and breakouts are meant to be read together.