Comprehending various Forex trading charts is essential for effectiveness whenever trading currencies. Here’s everything you may want to know about forecasting FX price actions by analyzing historical movements presented differently.
The bar chart records price movements using bars to represent the lowest & highest prices and opening and closing points. The vertical bar end shows the lowest and highest prices, whereas horizontal dashes on the vertical bar’s left indicate the closing price. The dash on the vertical bar’s right shows the closing price. On a daily chart, an individual bar represents 24-hour market movements.
Candlesticks, widely utilized in all trading classes, use match-like setups to signify price actions. Also known as the Japanese sticks, they display the difference between the 24-hour opening and closing prices.
Green or dashed candles show a higher closing than the opening price. An empty or red rectangle candlestick depicts lower closing prices. A vertical line within the candle body represents the difference between the higher and lowest price on a trading day.
A line chart depicts prices as dots on a graph. The rate at which the chart records prices relies on the overall presented periods. For instance, it will include all closing prices for each day if the chart accounts for multiple months. Nonetheless, if the diagram depicts price actions for several years, it will only include weekly or monthly closings. The vertical axis indicates prices, whereas the horizontal one shows time.
Moreover, monthly and weekly charts compress price movements for longer-range trend evaluation. A seven-day chart can analyze five-year price actions. The technique helps you assess markets from a long-term standpoint – a lucrative perspective that may lack when depending on 24hr timeframes.
Support & Resistance
Support and resistance levels are crucial for technical analysis. The former is a value area beneath the current price that can prevent continued declines amid downtrends. Contrarily, resistance is a region beyond the current price that challenges upward actions upon uptrends. Meanwhile, a breached resistance can become a support zone, and vice versa. You can maximize your trading profits using the available charts.