Live Forex and CFD Charts

To successfully analyze and read Forex charts, you will need to go through the types of charts available and understand what each one can do for you. Let’s summarize the main types of charts, and their functions and uncover the main steps of reading Forex charts.

Chart Types

1. Line

   The line chart is chosen by many traders because of its simplicity. The line chart is used to see the closing price for a particular time frame.

   Charting prices down the horizontal axis, which symbolizes time, is done from left to right. The price is displayed on a vertical axis, with the most current price being furthest to the right.

   Keep in mind that line charts are mainly used to see the closing price and understand the picture of an overall trend reducing market noise.

   

2. Bar

   The bar chart contains more detailed information on price charting compared to the line chart. It consists of a vertical line that represents the price range of a specific timeframe. The time periods can be hourly, daily, or others.

   The highest point of the bar represents the “High Price” of an asset, thus the lowest point shows the “Low Price”. The distance between these points is called the “Price Range”. The line also has ticks from each side showing the “Opening Price” and “Closing Price”.

   The consecutive bars together can give specific information on market trends and price ranges.

   

3. Japanese Candlestick

   As the name suggests, this price charting uses a shape similar to a “candle stick” as a visual representation. This chart is perhaps one of the most known methods traders use. One candlestick shows the “High” “Open” “Low” and “Close” prices at the chosen timeframe. The distance between the “High” and “Low” is called “The Shadow or Wick”

   The body of the candle indicates the distance between the “Open” and “Close” price. When the Close is higher than the Open price then the body of the candlestick is filled with green. This reflects a positive sentiment in the market, thus when the body is red and the market sentiment is negative.

   There are many different shapes and sizes to the candlesticks and the patterns they form, each one representing a specific measure and market trend.

   

The selection of the most suitable chart type for forex trading is a matter of individual preference and trading strategy. Candlestick types, renowned for their visual representation of price data including open, high, low, and closing values, are a popular choice. Conversely, line charts offer a streamlined depiction of price trends, while bar charts present a balanced view. The optimal type empowers traders to effectively identify a forex pattern, trends, and a potential signal for trading. Experimentation with various chart types is essential to determine the most effective tool for individual trading styles and objectives.

Choosing the appropriate timeframes for real-time charts is crucial for effective analysis and generating trading signals. Higher timeframes, such as daily or weekly, offer a broader perspective on market trends and patterns, while lower timeframes, like 15-minute or 5-minute, provide more granular details about price movements. Combining multiple timeframes can offer a comprehensive view. For example, analyzing a daily chart to identify the overall trend and then using a 15-minute chart to pinpoint entry and exit points can be a powerful approach. Ultimately, the best timeframes depend on your trading style and strategy.

Becoming a skilled chart analyst requires dedication and practice. Start by mastering average patterns like head and shoulders, double tops/bottoms, and triangles. Understand how technical indicators like moving averages and RSI can provide additional insights. Practice identifying support and resistance levels. Analyze historical price movement to recognize recurring patterns. Remember, chart analysis is an art and a science, so continuous learning and adaptation are essential.