A Brief Introduction of Forex Charts

A Brief Introduction of Forex Charts

Submitted by adil on Thu, 04/18/2013 - 07:04

Everyone who is involved in Forex knows the importance of understanding Forex charts. Here w will explain three important Forex chart types.

Line Chart:

Line charts are important to understand the trend of a market. Line charts are drawn by connecting high price of one period with high price of another period, connecting low to low, open to open. The most useful connection is of one closing price with next closing price because it determines the winning results between bulls and bears at that particular time.

Bar Chart:

Bar chart determines the price bar for a specific period of time like daily, hourly etc. The information that we get from bar chart is open, close, high and low. The bottom of the bar chart shows the lowest traded price while the top show the highest price. Similarly, the horizontal hash on the left side shows the open price while horizontal hash on the right side indicates the closing price. Bar charts are sometimes termed as �OHLC� charts since they show Open, High, Low and Closing price.

Candlestick Chart:

Candlestick charts are the most widely used charts in Forex. Many Forex traders recommend candlestick charts in order to analyze the market trend. Candlestick chart can be considered as the modified form of bar charts as they represent the same information just like bar chart but in a graphical format. In candlestick charts, the high and low prices are indicated with lines. The top vertical line is termed as upper shadow while the lower vertical line is termed as lower shadow. The large block in the middle indicates the range between the opening and closing price. In candlestick charts, you will notice the block filled with color or empty. If the middle block is colored, this mean the currency closed lower than the opening price. If we have a colorless block, this mean the closing price is higher than the opening price.

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