What is forex chart and how to read forex chart?

[Somrat4030]

What Is Forex Chart?

A chart in Forex is a visualization of the bid and ask price movements of the currency pairs and is represented in lines, columns, or in any other form. These price movements can be expressed in different time frames: minutes, hours, days, months, even years.

Currency exchange charts show the price movement this way: the x-axis (horizontal line) shows the time period - which can be anywhere from a tick data (the smallest price change of a Forex pair) to a yearly data, - and the y-axis (vertical line) shows the price of a pair.

Types of Forex Chart Patterns

Chart patterns are classified according to the signals or directional cues that they provide to traders. Here are the 3 types of chart patterns:


1. Continuation Chart Patterns
Continuation chart patterns form during an on-going trend and they signal that the . Continuation chart patterns usually occur during price consolidation periods and offer great opportunities for traders to open positions in the direction of the dominant trend. The most common continuation chart patterns include directional wedges, flags and pennants.

2. Reversal Chart Patterns
Reversal chart patterns form when a dominant trend is about to change course. The chart patterns signal that a prevailing trend's momentum has faded, and the market is about to reverse. If there is an uptrend, a reversal chart pattern signals that the market is about to turn lower; similarly, a reversal chart pattern in a downtrend signal that the market is about to turn higher.

3. Neutral Chart Patterns
Neutral chart patterns occur in both trending and ranging markets, and they do not give any directional cue. Neutral chart patterns signal that a big move is about to happen in the market and traders should expect a price breakout in either direction.

The Importance Of forex chart

You may not like the technical option at first, but you have to try to love looking at it hours after hours if you want to get the winning trades.

Things might seem easier for the beginner, and they rush towards the Forex market and lose a great deal of money without having proficiency in reading the chart. In a blink of an eye, thousands of dollars can vanish if the investor does not follow the right strategy based on the data of the chart. Before the execution of the trades, every time an investor asks himself if he ready for spending sufficient time with the chart or not.

How to read forex charts

Being able to read and interpret forex charts accurately is vital if you want to successfully trade in forex markets. Learning how to read live forex charts, as well as real-time trading charts, will enable you to take control and spot trends, allowing you to make calculated moves to seize opportunities to make money. Forex charts show a period depending on the time frame you select, most forex charts default to a daily time span showing trading data over a 24-hour period. But this can be changed to time frames that represent minutes or even months depending on your requirements. This ability to transverse forex charts over both short and long periods of time enables you to fully monitor the fluctuations in currency rates. For learn more about forex chart click here..

How do Forex Chart Patterns Work?

Forex chart patterns are normally seen in historical data, analysts find these technical indicators and if the pattern has repeated itself multiple times with the same outcome in the historical data a trader will try to predict when this pattern will emerge again and then enter a position based on this historical data.

Flags and Pennants
Similar to triangles, flags and pennants are among the commonest of all chart patterns. They appear regularly in both up and downtrends across all time frames.

Generally, the pennant will be more like a triangle in appearance than the squarer looking flag. However, the precise formation is much less important for us as traders than an understanding of the underlying price action, which is very similar in both cases.

Thank You

 

[Kingstone]

One of the few things I want to understand is the continuation trend patterns and the best way to understand the trend is to use the candlesticks patterns. I am a candlestick trader and I love to search for reversal patterns and continuation patterns. I need to make more research about continuation patterns. I have missed out on trades that are supposed to get me more money but closed early. I do not know how to draw the flags and pennants also. I understand they are good to determine trend patterns easily.

 

[Victorial]

That is a great article. Understanding forex charts is one of the best ways to predict the market direction. You have highlighted all the requirements needed to do so. The reversals, continuations, are all important to none. But forex can be so stubborn at times. Even when these patterns are showing, it does not mean your trade will go in that direction. Forex is affected by the news and this can easily change the direction of your trades

 

[Setho]

There are so many things that can be able to be indicated on a chart. For example if you will want to find out about the price chart then it is an illustration that can be shown to you elder in candlesticks or in line. It is going to be showing you how price has moved over a particular period of time that you have chosen and then you are going to make the decision for yourself whether it is going to go up or down. You can also be able to view other things on it like volume over a particular period of time.

 

[elit]

You have highlighted all the requirements needed to do so.

 

[Somrat4030]

You have highlighted all the requirements needed to do so.

Thank you so much.

Regards

 

[LaneBall]

Several technical analysts of all magnitudes and day traders make use of forex charts for signals and patterns to inform and back their trading decisions. The most common types of forex charts are line, bar, and candlestick charts; and the normal time frames that most platform's charting software provides start from tick data to yearly data. Extremely helpful technical indicators, these help in predicting future price movements to a certain extent.

 

[Zonked]

This is well explained information about forex charts. A good understanding of forex charts is important in order to place orders and get good profits from the market. Some traders do not give much weightage to the chart patterns but they do not realise that they are missing a great feature of forex charts that could help them in making better decisions.

 

[Setho]

Chart in forex is usually referred to as the environment in which you can be able to view price changes with time . There are so many things that are usually represented on the forex chart that can be able to help you to make your next decision.

The most prominent thing that you can see in the forex chart is usually the candlesticks for people who prefer to use them . The candlesticks are usually determination of how far price has been able to move from the previous candle . A lot of people have said that particular patterns on how the candles develop can be able to show you where price will go based on historical data .

The second thing that you are going to notice is the presence of technical indicators. Technical indicators give you a hillside about things that are happening in the market for you to for that make decisions. The most popular technical indicators in the market are usually volume , Fibonacci retracement , the exponential moving average and trans lines.

You can also be able to notice things like the order book which is a live indication of how much people are bidding and selling in the market.

 

[Sotherefore]

As I understand forex , to me its a digital market that involve the selling and buying of different world currencies at different rates with the expectation of selling it at a higher rate to generate profit. Because the forex market is not stable and as a result of this the market is very high in volatility and the most difficult thing here for traders is how to be able to know when to buy at the lowest point and sell at the highest point and will require a lot of expertise effort and knowledge to be able to predict the market accurately to a point of generating constant profit.

If you are new in to trading of forex you will not likely be able to generate a signal on your own, and you won't also be able to read chart because there is nothing you will base your reading on.

There are some professional indication and things a lot of expert are using to predict the volatile market and if you are thinking of becoming a technical analyst to be able to predict the volatile market I believe you have to learn and understand how it work professionally first. That will really help you.

 

[rextee]

A forex chart is a technical tool to keep track of the market, so you can analyse them and place trades. Reading charts are simple. A chart gives you information regarding the price movements. A candlestick chart, for example, tells you the open, close, high, and low prices of a currency pair for a duration.

 

[quindene]

A foreign exchange chart is used to study the history of foreign exchange rates. It allows traders to read the past price action of different currency pairs. A forex chart is used by forex traders to quickly read historical prices and also to identify various trends.

 

[Limivorous]

It is basically a graphical representation showing how the price of a currency pair changes over time. First of all forex traders have to choose a type of chart, as each of which is read in a different way. For instance HLOC, which stands for high low, open close that shows exactly the same data as a candlestick chart, but in a different way.

 

[glabella]

A forex chart is a visual representation of the different aspects that make up the trading that takes place. So for example, the rate during a certain week, etc etc. it also shows the price movement that goes on. How does one read them?

Reading them is inherently necessary in order to be successful in this business. There are three types of charts to read:

1. A line chart: this is fairly simple to read and can be graphically represented.
2. A bar chart: this shows the opening and closing prices and is a little more complex to read.
3. A candlestick chart: a variation of the bar chart, it is the most complex of them all and is a lot harder to read.

 

[Lens1000]

Forex is a very important investment online and I have been very careful when it comes to the discussion of forex online. The major reason is that no one could say that he is 100% expert. Or better still, no one could say that he as the 100% strategy to win in forex all the time. This is basically the major reason why one need to be very careful when it comes to forex analysis. The so-called hundred percent strategy also fails and that tells you that no one is a forex bellwether. In the same vein , when you are thought the chart analysis, you should have it at the back of your mind that you still need a strategy that works for you
This strategy is unique to you. You could call yourself a forex expert if you could be able to win 6 trades out of 10 trades. That means, you show win by 60% . Then, you are on the winning side of your trades. Now, I use the MA and the ATR indicators. Also , I combine the indicators with just one candlesticks patterns which is the bullish and bearish engulfing. If all of these are not on conformity with the trend, then I switched to the pure price action.