Forex Charts

Forex Charts

Understanding 3 Basic Forex charts.

How to use them to see trends in Forex rates

You can view Forex charts to navigate trends in a variety of formats. Usually, your analysis tools will by supplied by your broker. Come traders also purchase software solutions for technical analysis online.

There are many types of charts for the Forex trader to use, but this article is going to give you insight into the basics. If you are familiar with the stock market, you may be familiar with some of these charts and how they are used.

When reading this article, you may find it helpful to use your charting software to generate some charts so you can learn as you go along.

The Forex Candlestick Chart

Each “candlestick” is composed of a vertical rectangle and/or vertical lines. The lines are actually more like blocks that look like a candlestick. This is the most common chart used to see trends in Forex rates. When looking at a candlestick chart, make note of the following:

• The rectangle – is it black or white? The rectangle color indicates the open and close of a day or trading periods. It may be colored black or white. It depends on the relationship of the open and close to each other. A white body indicates that the asset price, at the end of the day, was higher than it was when it opened. A black body signifies a closing price lower than the price at the opening of the day. The lines, often called shadows, show the high and low of the day.

• Candlestick lengths – how far do they range? The lengths of each candlestick's rectangle and shadows show the range of trading in a day. This can give a trader a good view of each day relative to previous and following ones.

• The patterns – what do they mean? Patterns of candlesticks, sometimes called constellations, maybe interpreted as an indication of human trading activity.