Forex Charts and Diagrams
Types of Forex Charts and Diagrams and How to Read Them
For those trading Forex, charts and diagrams are key tools. Forex charts and diagrams give traders the chance to look at market conditions, create forecasts and to see trading patterns that will influence trading decisions.
Line Charts
Line charts are the most basic of Forex charts. They simply indicate the closing points (or actual rates, depending on the depth or time frame of the chart) and connect the dots between them to show increases, decreases and the direction of the market.
Point and Figure Charts
Point and figure charts simply show the trends in price within the market without considering time. Support and resistance levels are indicated and, as the price rises above the resistance level - indicated by a rising stack of Xs - or drops below a set support level (as indicated by a declining stock of Os), forex traders will make their move.
Bar Charts
Forex bar charts give traders and investors the chance to look at one unit at a time and to see associated rates. HLC bar charts show the high, the low and the closing rate; OHLC bar charts show the opening rate as well.
Candlestick Charts
Candlestick charts show the opening price for a currency pair and indicate the amount of increase or decrease over the course of a given time. Additionally, candlestick charts show the full range of highs and lows in trading while focusing on the bulk of the trading action.
Different investors have their preferences about which charts they use and rely on and the type of pattern that they look for. The more that you trade Forex, the more that you will want to consult charts and become familiar with using them.
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