Forex charting is a reliable system of getting information and statistics about the forex market. It helps identify Forex trading signals and short-term currency trends and provides a realistic view of the forex market. It is user-friendly, interactive and powerful tool and depicts currency fluctuations during a given time period, which may range from a minute to a month or several years. Represented in line, bar or candle format, forex charts provide real-time data, along with a range of tools and features that facilitate forex trade. Forex charting is especially useful for traders who use technical analysis to predict price movements.
Forex Charting: Types
There are several types of forex charting, which include line, bar, candlestick, point and figure, equivolume, Renko and Kagi charts. Here are the basic ones:
Bar chart: Representative of currency price, it forms vertical bars in a day.
Point and figure: Similar to bar charts, they depict market changes in the price direction.
Line charts: Represents the exchange rate of a currency pair during a specific period.
Candlestick chart: It predict the present market, representing the opening, closing, lowness and highness of prices as candlesticks.
Forex Charting: Tips for Analysis
The right analysis of forex charting is a must for dynamic trading. An inability to analyze charts can adversely affect other analysis results and provide false reading. Chart analysis usually involves identifying the direction of price movement. It also involves identifying the major and minor trend, and the support and resistance levels. To analyze a real time chart, the trader should select a currency pair and the timeframe for each bar.
To identify trends, the best way is to look for lower lows and lower highs for a downtrend and higher highs and higher lows for an uptrend. After identifying the direction of the trend, determine a point of entry into the trade in the direction of the trend. Trading against a trend is risky, as it may lead to losses for an inexperienced trader. So, the key to forex success is keeping trading simple and following the rules.
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