Hi everyone, I wanted to share something I’ve been experimenting with recently. It all started from a discussion in an earlier posts about how markets are fractal in nature. One strategy that I’ve really been enjoying is the Renko S&R Strategy shared by Sean Kozak a couple of weeks ago. Its simplicity, particularly as a trade trigger, is remarkable, and I’ve consistently observed it working effectively in the markets since I started using it.
I’d like to propose a slightly different approach to the strategy, while still using the same core mechanisms. This is just an idea at this stage—it hasn’t been fully back-tested or forward-tested yet—but I wanted to put it out there to see what everyone thinks! Since it’s fundamentally the same as Sean’s strategy, which has already proven reliable!
So the strategy in a nutshell:
Choose a higher timeframe for this example I used a 40 tick bar, 80 Tick reversal BXT Bar.
Plot out the S&R zones. Like I have done in this screenshot here
Make sure any zones you draw on the higher time frame charts are set to apply to all charts
Half the time frame (or close to, but it should be at least half the size of the higher time frame).
What you want to do now is look on the smaller BXT bar and then wait until it hits a zone and then wait for an entry of Renko S&R that corresponds with the resistance that you are expecting within that zone.
To walk you though that example here is a trade that would of failed by relying on just the higher time frame renko S&R but actually paid off with the smaller time frame but using the higher time frame as context and bias.
Zone was mapped out and you can see on the higher time frame zone (yellow box) where the red arrow is where we would typically enter on test of this zone but we would of been stopped out and not got our 1:1 not to mention this would be quite a large stop.
However if we drop down to the smaller timeframe and zoom in we can see before that we were breaking any previous Higher Lows to suggest a change in the trend. We then saw this big pushdown from the top of the box which was the first meaningful trend change on the smaller time frame. We then draw the Renko S&R Zone (red zone in this picture) as our entry point.
This then actually moves all the way down to the bottom of our higher time frame Renko S&R for a rather large R:R but if you wanted to keep with the same 1:1 R:R as the original strategy has then this would definitely of hit that.
And a we can see from this zoomed out view the Red box is pretty much the perfect entry point from this trade.
As I said before its just the beginning of the investigations but I quite like this top down approach to the Renko S&R and I think that could be some very interesting risk to reward approaches here as well.
Please let me know your thoughts.