The Forex charts are a graphical representation of exchange rates between currencies. A Forex chart allows a trader to view historical currency exchange rates. Most forex brokers will provide free forex charting software for clients who have open and funded trading accounts. Forex charts, like those available for other securities, present information useful for the technical analysis of a currency pair.
Forex charts used to analyze currency prices technically.
It uses technical analysis as a technique to gain an understanding of what to trade next. This technique is strongly based on forex price graphs as it uses historical price information to predict future price motion and trends. But, price charts are not only used by technical analysts, but they are probably the most commonly used instruments in the entire country of investors.
Price graphs are simple graphic representations of a forex instrument’s price against set periods. But don’t make any mistakes; these simple pictures can provide instant and helpful data on how tool prices have moved in the past.
History tells that since the 18th century, rice traders in Japan plot price charts on paper to help them study the patterns formed and make a profit out of them. These days, traders are still very much interested in price charts for the same reasons and with the use of computers they can have within seconds a variety of chart visualizations.
There are 3 types of forex charts
The line chart is the easiest Forex chart. It represents a curve that shows the closing price for any period. It can base a line chart on the average price cost, the opening price, lows or highs. This chart, at the very beginning, that’s why it is a very simplest and lowest informative graph. This is very simple to draw. Each new period has two main parameters; they are the open price (the price when the new period starts) and the close price (The price when the period closely). These are one forex charts.
Main features of the line price charts
1. line chart is not useful for trading and only used to price patterns based on geometric shapes.
2. Line price chart is more efficient for long periods, this line chart time frames, trend lines set the price ranges; to draw them, the key parameters of the price are important.
3. Its display form is used in combination strategies, depending on the price graph and the EMA indicator, because it sends more accurate signals for entering and exiting a trade.
The bar chart of the price was developed after the line chart. This price chart is more informative and complex. They created it in the USA; it is popular in Western countries. Most conservative traders in the West still don’t apply any other types of price charts.
The bar chart expands to the line chart, and the bars provide more information about the price as they are high, low beside the open and closing price over a period. This is one of type in forex charts.
Main features of a Bar charts
1. The opening price is the horizontal dash on the left side of the horizontal line and the closing price is located on the right side of the line.
2. Bar charts come in two types: rising bars and falling bars. In the rising bars, the opening price is lower than the closing price; for the falling bars, it is vice versa.
3. There are many special trading strategies to operate with bars, the main ones are pin bar trading strategy, inside bar trading strategy, engulfing bars.
- Munehisa Homma, a Japanese trader, developed in the 18th century to measure high and low prices.
- This price graph is the most informative.
- This chart provides color information on the rise or fall.
Main features of a Candlestick chart
1. Japanese candlestick’s main feature is opening and closing prices known as the lower and upper body of a candlestick and displayed the candlestick chart.
2. Candlesticks can be of several types: white growth candlestick with shadows, white growth a white candle of growth without shadows, a candlestick without shadows and a body, a candlestick without a body with shadows, a black candlestick with shadows, a black candlestick without shadows.
3. There are many trading strategies, applying candlestick charts. They developing a particular technical analysis that is called candlestick analysis. The analysis suggests looking for repeating combinations of similar candlesticks. They are candlestick patterns. Now, there are developed over 100 plus patterns.
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