A Renko chart is a type of price chart created by bricks that move up or down from the previous brick at a 45-degree angle. Bricks are never directly beside one another. The user of the Renko chart determines the brick size for the chart, which then determines when a new brick will form.
As an example, let’s analyse the below Euro 50 Index price chart. If a 35-brick size is chosen, this means that the price needs to move 35 points from the closing price of the prior brick in order to form a new brick in the current direction. Since bricks can’t form beside each other, the price needs to move 70 points to form a brick in the opposite direction. Only moves of 35 points, in this case, are highlighted by the bricks. Moves smaller than 35 points (from the previous brick) will not form new bricks.