You have the option of a range of forex charts to aid you in the prediction of currency rates. Charts are an excellent method of prediction and will help you place successful trades. You will have the facility to apply the data and the prediction to your trades.
Line charts are used to plot a single value, such as the closing price for a specified period. These charts are displayed in differing formats. It may show a continuous line as an angled line, steep line or a splinter. It may also be plotted as individual point on a chart. An alternate method is to make use of a vertical line for each period or it can be displayed as a vertical bar for each period.
Candlestick charts were initially used in Japan for analysis of rice contract prices. It shows the opening, low, high and the closing prices in a fashion which is similar to the bar charts. These charts are simply a different method of viewing the data. It does not require additional calculations.
Bar Forex Charts
Bar charts show you the opening, low, high and closing currency prices for each period that you have set. You make use of a vertical line to join the low values with the high values. A dash on the left hand side shows an opening and if the dash is to the right hand side, it indicates a close. A hyphen indicates when the low and the high have reached the same price level.
Point and Figure
Low and high point and figure charts can be compared to analysis. The one difference is that analysis uses low prices and high prices instead of closing prices. These charts are used to identify trends, identify support and resistance regions, and generate buy and sell signals.
Trend lines are used to join two points on a chart. If you see successive points that are not breaking through a line on the chart, it can be seen as a trend direction. The concept of the trend is that it should remain in motion. As long as the line is not broken, you can determine the most suitable points of entry and exit.
By constructing forex charts, you are entering the first stage of your market analysis. By using the formation on a chart you are able to identify the shapes and patterns that will allow you to predict the trend or the direction the currencies will move in future. Charts are a method of displaying the price levels of the forex market. Your forex charts will show you the expected price levels, but the final decision lies with you as to the most opportune time to buy or sell. Charts give you the basics to make those decisions.
Trading markets very seldom move in a straight line. The general trend is to move up and down. These up and down trends can be seen as successive waves with troughs and peaks that become quite obvious to the person viewing the chart. These trends will allow you to enter into profitable trades.