How To Read Forex Charts detailed

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How To Read Forex Charts
If you want to succeed in trading and make a
full-fledged trading career, you must know how
to read forex charts. Most beginners or novices
make the mistake of entering into trading
without gaining knowledge about charts and
patterns. Learning how to read Forex charts
should be the first step before getting into
trading. They will help you to make money on the
exchange. Hone your trading skills by mastering
the art of reading Forex charts. To make
appropriate decisions associated with your trade,
you need to look at charts for trade signals and
patterns. Forex charts include ticks, points and
figures, lines, bars and candlestick
charts. Here is our detailed guide on how to
read Forex charts. You can use the tactics
mentioned below to take your trading game to the
next level by reading charts. What is a Forex
Chart? A Forex chart graphically represents the
historical behaviour of the exchange rate
between two currencies. It shows the data across
various timeframes. You can watch the
performance of any currency pair you want on a
graph (Forex chart). Traders, especially involved
in short-term trading, look at these charts to
identify the entry and exit points, reversals,
signals and moving averages. Traders use Forex
charts and technical indicators combined to
predict about trades more accurately. Traders
also use the traded volume of futures contracts to
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observe the market conditions. The exchange rate
levels shown by the Forex chart are known as
support and resistance levels. By looking
precisely at past price movements on a Forex
chart, it would not be wrong to say that Forex
charts predict the future price movements. You
need a well- regulated broker to use the
charting software to serve and guide you
throughout your trading journey. ROinvesting is
one of the best brokers that offers world-class
charting software comprising more than 30
technical indicators. It provides
the award-winning trading platforms with
favourable trading conditions for its
clients. What to look for on a Forex chart? You
can observe market trends and exchange rate
patterns that can help you to execute various
trading strategies, including scalping, day
trading and swing trading. In addition, you can
use several technical indicators to predict the
future price movements of the trades in which
you are interested. Forex charting software can
easily be customised. If you want to go for
advanced technical analysis, you may wish to use
Elliott Wave Theory. This theory tells us about
wave patterns by looking at exchange rate
movements. There are five waves that move in the
direction of the trend. Three out of those five
waves make the trend correction and correct the
trend in Fibonacci ratios. By understanding
Forex charts, it would be easy for traders to
determine where to invest their funds through
technical analysis. One should know how to use
the forex charts to implement this technical
analysis. You can use the free charting software
offered by the reputed broker ROinvesting.
Technical analysts believe that the current
balance of buyers and sellers is more important
than the fundamentals of the currency
pair. Time frames and Patterns The charting
software of most trading platforms offers all
normal time frames from tick data to yearly
data, including minutes and months. There are
various chart patterns, including flags and
pennants, gaps and channels, ranges and
triangles head and shoulder, double, triple and
saucer tops and bottoms. But on a surface level,
forex charts give you the results through lines,
bars and candlestick charts. In a Forex chart,
the time period is generally mentioned on X-axis
and the exchange rate on Y-axis. Types of Forex
Charts There can be different types of Forex
charts. And traders can use them according to
their convenience. You also can use the most
suitable trading chart as per your trading
style. But, of course, there is no specific
categorisation of forex charts according to
different trading styles.
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• But choose the one and hone it. If you look at
  various forex charts and charting patterns at
  one time, you will definitely get confused. Here
  are the most common Forex charts that are used
  among traders.
• Line charts
• Bar charts
• Candlestick charts
• How to read trading charts
• Line charts
• The line chart is the simplest of all trading
  charts. It connects one closing price to
  another. When the closing prices are joined
  together, the line is formed. Line charts are
  relatively easy to use. One can quickly identify
  the entry and exit points by looking at lines as
  they will show you the rise and fall of the
  currency at a particular time.
• They are used to observe single exchange rates.
  Line charts consist mainly of closing prices
  only. It does not include other data. Traders use
  them to find overall trends or other important
  patterns to minimise the risks. You will see the
  fixed time intervals on the x-axis and the price
  range on the y-axis.
• Line charts can show you the effect of short-term
  trends on currency pairs. For example, if you
  see a steep fall in the relative price of a
  currency pair, it indicates that it is the right
  time to buy the underlying currency pair.
• Bar charts
• It is slightly complex to use the bar charts. But
  they provide more information as compared to
  line charts. So traders who want no risks and
  carry focused research on the underlying assets
  can use bar charts. It is quite obvious that
  there are fewer chances of potential risks if
  you use bar charts correctly.
• Bar charts generally show exchange rate gaps.
  When you look at a bar chart, you will see the
  highs and lows for each time period. This pattern
  forms bars. They also have fixed time intervals
  mentioned on the x-axis. There are both open and
  close levels also on a bar chart. Bar charts are
  also known as HLOC charts. HLOC means High, Low,
  Open, Close.
• The vertical line you may see on a bar chart
  connects the high and low. You can identify the
  open level with a horizontal dash towards the
  right and close level when the horizontal dash
  towards the left.

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Traders use candlestick patterns to pinpoint
their entry and exit positions. The best part
about these FX charts is that they can show you
the blocks of range of opening and closing
price. For example, white colour means bullish
candle and black colour means bearish
candle. There is another term included in
candlestick charts is wicks. Wicks is referred to
the vertical lines between the low and the open
between the high and the close. You may see both
long and short wicks.