How to Read the Three Types of Forex Charts
To read forex price charts forex traders will need to first of all learn forex technical analysis.
This forex technical analysis study of forex price movement will analyze historical forex price moves using forex trends and forex chart patterns in an attempt to predict the next likely movement of the forex price direction.
A forex chart can be described as a graph representation of the forex price of a forex instrument over a specified forex chart timeframe period.
The forex charts use the y-axis or vertical axis to represent the forex price scale and the x-axis or horizontal axis to represent time scale. Forex prices are then drawn from left to right with the most recent forex price being plotted at the furthest point to the right of this forex chart.
The forex chart can have different chart timeframes
MT4 Forex Trading Chart Time-frames
M1 for 1 Minute Forex Charts
M5 for 5 Minutes Forex Charts
M15 for 15 Min Forex Charts
M30 for 30 Min Forex Charts
H1 for 1 H Forex Charts
H4 for 4 Hours Forex Charts
D for Daily Forex Charts
W for Weekly Forex Charts
M for Monthly Forex Charts
MT5 Forex Chart Time Frames
M1 for 1 Minute Forex Charts
M2 for 2 Minutes Forex Charts
M3 for 3 Min Forex Charts
M4 for 4 Minute Forex Charts
M5 for 5 Minutes Forex Charts
M10 for 10 Min Forex Charts
M12 for 12 Minutes Forex Charts
M15 for 15 Min Forex Charts
M20 for 20 Minutes Forex Charts
M30 for 30 Min Forex Charts
H1 for 1 H Forex Charts
H2 for 2 Hours Forex Charts
H3 for 3 Hours Forex Charts
H4 for 4 Hours Forex Charts
H6 for 6 Hours Forex Charts
H8 for 8 Hours Forex Charts
H12 for 12 Hours Forex Charts
D for Daily Forex Charts
W for Weekly Forex Charts
M for Monthly Forex Charts
These forex chart timeframes are used to plot forex price data movement over the specified forex chart timeframe period and traders can then analyze forex price movements from these forex charts.
Using forex charts makes it easier for forex traders to analyze forex price movements because forex traders can analyze forex price trends as well as forex price patterns.
Forex price charts are used to analyze supply and demand for the forex price movement. And changes in the supply and demand will be depicted in the forex price movement.
Forex technical analysis study is then used to analyze these forex price movements on the forex charts. Forex technical analysis assumes that all the market information has been factored in the forex price action movement based on supply and demand for a particular forex instrument and this supply and demand is depicted in the forex price action movement that occurs on the forex charts price movement.
The Three Forex Charts Types That are Used in Technical Analysis
The three forex chart types used for forex technical analysis are:
- Line Chart
- Bar Chart
- Candlestick Chart
Forex Line Chart
Forex line chart draws a continuous line from one closing forex price to the next closing forex price and this then depicts the movement of forex price of a particular forex instrument over a period of time on the forex chart.
Forex line charts do not provide forex traders with a lot of details and information about forex price movement and the only information plotted by this line chart is of where the price closed for a particular forex chart timeframe period.
The forex line chart can be used to analyze forex trends based on the direction of the forex line chart movement.
Forex Bar Chart
A bar chart is used to show the opening forex price, the high forex price, the low forex price & the closing forex price.
The bar chart will depict the whole forex price range for each forex trading period - using the above forex price data points - opening forex price, the high forex price, the low forex price & the closing forex price.
The vertical bar indicates the forex instrument trading range as a whole for the period
Tops of the bar indicates the high forex price
Bottoms of the bar indicates the low forex price
A dash that is drawn to the left of the forex price bar indicates the opening forex price
A dash that is drawn to the right of the forex price bar indicates the closing forex price
Forex Candle Chart
A candlestick chart is used to show the opening forex price, the high forex price, the low forex price & the closing forex price.
A forex candle chart is represented in a easier to read and interpret format compared to the forex bar chart.
Candlestick forex charts represent the same data as that of a bar chart but in a much easier to interpret format.
Forex Candles have two parts: the body of the candle and the shadow of the candlestick
Forex candlesticks have a body which is the difference between the opening forex price & closing forex price. The body of the forex candlestick will have different colors depending on the direction of the forex price.
Blue or Green Candlesticks for when price moves up
Red Candlesticks for when price moves down
The forex candlesticks also have protruding lines above and below the body of the forex candlestick - these protruding lines are known as shadows. The upper shadow represents the high forex price & the lower shadow represents the low forex price.
How to Read the Three Types of Forex Charts
