Renko Chart Trading
On Thursday, the SP 500 FUTURES began to trade downward. The declining trend accelerated on Friday, with the index closing at its lowest level of the week-4,314. The region between 4,350 and 4,384 looked to be troublesome on the 1-hour and 5-minute Renko charts on Wednesday, but it was not apparent on the daily chart. Using Renko chart trading techniques, the preceding close of 4,314 was noteworthy since it was the previous close when the SP 500 Futures suffered a one-day correction and was identified as the bulls’ first line of defense. The intensity of this correction will be determined by whether or not the 4,314 can halt the fall.
The SP 500’s Renko chart trading patterns and technical analysis indicate that the bullish trend is likely to continue. However, the present short-term bullish trend may be stalling. We’re not sure if 4,384 was the top that formed. One thing to remember is that starting a new long position at this point should be done with extreme caution. Writing covered calls on the equities you own to provide downside protection may be a reasonable option at this time.
- The traditional 6-point brick size is used in the Renko chart.
- On the upside, the bulls must overcome resistance between 4,350 and 4,384 in order to maintain their bullish momentum.
- On the downside, the 4,314 is important. Otherwise, the next support zone may not be seen until the Futures reaches the 4,242 region on the daily chart.
How to Apply Renko Chart Trading Patterns and Technical Analysis in Trading – Support, Resistance, and Trendline
As illustrated in the daily Renko chart below, the SP 500 Futures stopped after reaching all-time highs and finished down for the week. We closed at 4,360 last Friday. We are at a crucial level of 4,314 this week, as of today. If the 4,314 region is unable to halt the decline, the next obvious support level on the daily Renko chart is around 4,242. Nonetheless, there is no sign that a top has formed, and the bullish trend continues. The rising trendline is also getting close to the 4,242 level. However, due to this week’s drop, the bulls will need to overcome the zone between 4,350 and 4,384 in order to drive the price higher. Otherwise, a short-term correction is likely.
Daily Renko Chart
The current trading range between 4,350 and 4,384 looks to be rather worrisome on the hourly chart, as we pointed out on Wednesday. As shown by the yellow area in the chart below, it is clearly evident that it is a barrier for the bulls, and we are trading below it. If the 4,320/4,314 support level fails to halt the slide, the next level of support on the hourly chart is at 4,290. If it does not hold, we will see a sharper drop toward 4,250.
Hourly Renko Chart
The picture on the 5-minute Renko chart is the same as on the hourly chart. The last trading range of 4,350 to 4,384 looks concerning. We are clearly trading below the yellow zone on the chart. We’ll see if 4,314 can halt the slide. If not, the next level of support is at 4,284. The drop may be prolonged to 4,250 if it falls below that level.