Renko charts are simple swing charts. These charts are well known for their ability to visualize the trend of an instrument clearly. Adding a simple indicator such as Triple Moving Average can help understand the trend of the instrument even further. But what if we wanted to understand the strength of the trend? A simple indicator that can tell us about the strength of the trend is the Brick Zone indicator.

Logic of Brick Zone indicator

The Brick Zone indicator is built on a simple idea: in an uptrend, more bullish bricks will form, and in a downtrend, more bearish bricks will appear. It helps identify which type of bricks—bullish or bearish—are dominant over a defined look-back period. 40 bricks is the default look-back period for this indicator.

The indicator works by counting the number of bullish and bearish bricks during this period, subtracting the bearish count from the bullish count, and plotting the result. It oscillates around a zero line:

• A positive value (above zero) indicates bullish dominance.

• A negative value (below zero) signals bearish dominance.

This makes it easy to assess the prevailing trend strength and direction at a glance.

How to Trade using Brick Zone?

Brick Zone acts as a tool for confirmation. At any given time, the indicator will either be in a bullish zone or a bearish zone. To trade using this indicator, simply add a Triple Moving Average to the charts and trade swing breakouts in outperforming stocks when the trend and Brick Zone indicators align.

Observe the chart below of BAJAJFINSV and BHARTIARTL on 1% (Daily). When the price was above the Triple Moving Averages and the Brick Zone was in the bullish zone, each breakout (marked as black horizontal line) could be used to participate in the trend.

Observe the chart below of HONAUT on 1% (Daily). Observe point 1. Although the price gave a swing breakout, the Brick Zone indicator did not indicate a bearish strength. Therefore, those swings would have been avoided. Observe the swings subsequent to point 1.

Renko charts simplify trend analysis and, when combined with the right indicators, can form the basis for powerful trading strategies across timeframes. If you want to master this method and enhance your trading skills, the How To Trade Renko course—available as part of the TNT One membership—is a great place to start. TNT One also includes access to in-depth courses and exclusive members-only webinars on topics like Candlestick charts, Point & Figure, Relative Strength, Momentum Investing, Intraday trading, Trade Automation and much more. Check it out using the link below. 👇👇👇👇