Drawing lines on charts might seem silly and indeed it can be. Forex brokers provide a variety of different technical charts to help you place a trade. Some brokers offer the bare minimum with only the forex rates mapped out. Other brokers will provide the support and resistance lines on the chart. It is important to know what the range chart is and how it can be beneficial to your trading scenario. Discover more information about charts below.
Forex Brokers with Range Charts
Support and resistance levels vary depending on the trends seen in forex charts. Forex brokers providing more than one chart with lines ensure you have the data you require without looking too hard. In a range chart you have the support, which is the point a currency pair rate will stop at. It will not go lower than a specific rate. Support trends can appear because a buyer might have missed an opportunity and is now looking to get in. It can also happen when other traders want to add to a current purchase, or they decide taking profit is essential. It can send the prices back to the starting point or near it at least.
Resistance is also part of the range. The resistance level is the point at which the pair is going to stop increasing in rates. Again, it can have to do with taking profit, when someone is trying to hit a selling point before losing money, or when a trader wants to add to the position at a lower level. Forex brokers helping you trade also help you create range charts since you base your movements on the charts you see and the news of where the pair might head. Technical analysis is a bit self-fulfilling since you concentrate on the trends you see instead of the news.
You jump in and out when you believe a trend is over. There are two types of support and resistance formations to recognise.
Horizontal is when the levels are, well, horizontal. They are the easier formation to spot. You have vertical or diagonal in which you have a support and resistance range, but there can be a secondary trend such as an overall downtrend. Usually the pair still moves in a range and does not reach a new high or low, but has started moving out of the consolidation range.
Taking Forex Brokers Leverage into the Flow
Forex brokers offering you the lines already charted will make it easier for you. It will be possible to say there is a diagonal trend that has yet to breakout into a flow. You can even prepare for the “flow” versus range. Going with the flow means you are going to follow the breakout trend to a certain profit point and take your money out. It also means the consolidation period is over.
Forex brokers have leverage, which you might wish to use on your trades. If there is a breakout or flow about to happen you might want to put more into that trade than you have readily available. At the same time using leverage in this scenario can be dangerous, so be wary of Australian leverage and flow issues.