Understand Forex Charts for Better Trading
In the world of forex trading the role and use of charts or charts is the most important thing, especially in technical analysis because the graph is the only object used to map price movements. Now the results of this mapping can later help you to trade better. This is because when the graph moves that’s when we can see and predict prices. Because you could say graphs are a reflection of the real market. For this reason, as a trader, it is very important for you to understand the charts of forex.
Here are some types of forex charts that are often used in technical analysis including:
This line chart is formed / drawn from a simple line that connects from one closing price to the next closing price. When strung together to become a continuous line, you can see the price movement pattern of a currency pair for a certain period of time.
In this bar chart, contains information such as the opening price (open), closing price (close), and the movement dynamics (high / high-low / lowest). The bottom shows the lowest price, while the top is the highest price, in a certain period of time. This period varies, can be in 5 minutes, 10 minutes, 15 minutes, 1 hour, 1 day or even up to 1 month. In forex trading terms this time period is often referred to as the time frame
Candlestick charts or can also be called candle charts. Shows the same information as in the bar chart, but the candle chart appears in a more beautiful and beautiful graphic format. In the wax chart the center of the vertical line will be wider so that it forms a box or box. This box will be colored where it will indicate that the price goes up or down. If the box is colorless or white, it indicates that the price is rising, whereas if the black box indicates the price is falling. But in its development, people are more accustomed to signaling price increases in green and those that go down in red. So in addition to black and white candlestick chart applications are also displayed with a green and red color configuration
Broadly speaking, the chart pattern itself is divided into 3, namely:
TREND FORWARDING PATTERN
For trend forwarding patterns, as we know that a graph is said to be an uptrend if the price moves higher and is said to be a downtrend if the move is lowered.Therefore, a pattern that shows that the trend will continue is an increasingly high low for the rising trend and high which is increasingly low for the downtrend
DIRECTION REVERSAL PATTERN
In this reversal pattern the price will reverse direction if it cannot move higher than the previous high or cannot move lower from the previous low. This is what makes, when a graph cannot move beyond the previous peak, this means that the power to move higher is gone. This weakening is a symbol of reinforcement from the opposite side. When the strength of the opposite side enlarges and breaks the set limit, the price will reverse direction
The soaring price conditions at the moment are initially at the bottom, because there are people who raise them then the price then moves higher. When it is above the market, it cannot continue to move straight up, because every movement is a victory for one party. Likewise when prices are at the peak, this does not escape resistance. Therefore there is a time for the market or market to move back a step before continuing to move forward 2 steps.
Causes of correction:
- Profit taking action of people who succeed in mobilizing the market from the bottom
- Doubt or motion of no confidence from some parties, so that some resigned
- Resistance from opposition
The form of this correction pattern is basically to make sure what really happened.