The Renko charting method is 
thought to have acquired its name 
from "renga" which is the Japanese word 
for bricks. Renko charts are similar to 
Three Line Break charts except that 
in a Renko chart, a line (or "brick" 
as they're called) is drawn in the 
direction of the prior move only 
if prices move by a minimum amount 
(i.e., the box size). The bricks are always 
equal in size. For example, in a 5-unit 
Renko chart, a 20-point rally is displayed 
as four, 5-unit tall Renko bricks.

Kagi charts were first brought to 
the United States by Steven Nison 
when he published the book, Beyond Candlesticks.

Basic trend reversals are 
signaled with the emergence 
of a new white or black brick. 
A new white brick indicates 
the beginning of a new up-trend. 
A new black brick indicates 
the beginning of a new down-trend. 
Since the Renko chart is a trend 
following technique, there are 
times when Renko charts produce 
whipsaws, giving signals near the end 
of short-lived trends. However, 
the expectation with a trend following 
technique is that it allows you to ride 
the major portion of significant trends.

Since a Renko chart isolates 
the underlying price trend by 
filtering out the minor price changes, 
Renko charts can also be very 
helpful when determining support 
and resistance levels.