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There are different types of forex trading charts out there. Among them are the candlestick chart, bar chart, line chart, point and figure charts, three line break chart and many more. This is obvious to state that forex charts are predominantly used in the technical analysis. Regardless of your choice of market analysis, you will agree that charts will always come in handy because they represent information on price changes in the market in the simplest form. But some forex charts give more information than others.
How to read Forex charts
As said earlier on, there are different types of forex charts and as such, each has a different way of interpreting the information it provides. So the only way around it is to get familiar with each chart and learn how to interpret it.
What is live Forex chart?
As the name implies, it is the type of chart that shows the changes in price action as well as different variables in real time.
Candlestick chart
The candlestick chart is of a Japanese origin. It has two parts namely the body and the shadows. This type of forex chart is a little complicated so you must pay attention to how to read candlestick charts. The top and bottom parts of the body shows the opening and closing prices for the time period under consideration. The top and bottom of the shadow part also show the high and low prices for the time period being considered. The body of the candlestick chart will be filled in depending on the available information about the opening and closing prices. If the closing price is lower than the opening price, the body will be filled. On the contrary, if the closing price is higher than the opening price then the body will not be filled. The filling in of candles signifies a decline in candles. Open candlestick signifies an increase in price. But there will be no shadow above or below in a case where the closing or opening price is high or low.
Line chart
This type of forex chart is by far the simplest. It has an X and Y-axis. The Y-axis represents time frame whereas the X-axis represents price movements. This type of chart does not give information such as high or low, opening or closing prices. Regardless, it is still a very useful asset to have. It is read by simply reading the slope o the chart. You will agree with me that even though it lacks information on certain aspects in the market, it offers simplicity and easy understanding.
What is bar chart
Bar chart is one of the oldest methods of displaying information. It uses vertical bars to display information on price action for a time frame with the help of a line drawn from the lowest price action moving up to the highest price action.
Three line break chart
It is made up of vertical boxes that display the changes in price action of securities. Each of the line may indicate buy, sell, or market trends. The basic idea is to buy when a white line appears after three adjacent black lines and to sell when a black line appears after three adjacent white lines.
Point and figure chart
This chart type is rarely used by traders in forex analysis. It displays intraday increase and decrease in price action of securities. X represents an increase in value whiles O represents a decrease in value.So in a nutshell, an increase in X means there is an increase in the value of a currency while a decrease a decrease in O represents a decrease in currency value.
Conclusion
As proven by the above-listed forex charts, it’s obvious that there are many ways of analyzing the forex market using technical analysis. You just have to choose the one you are comfortable with or better still you can use as many of them as possible since some charts offer more information than others.