How to read charts

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Forex Charts

How Do I Read Charts?

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If you can’t read the charts, then you won’t make sense of any of the data, which to form your strategy.The charts can be placed in to three different categories:

  1. Line Bar Charts
  2. Bar Charts and
  3. Candlestick Charts

1. Line Bar Charts

The easiest to read of the charts is the Line Bar Chart. It simply shows a line graph of time vs. price.

Line Bar Charts

2. Bar Charts

The next chart to decipher is the Bar Chart. Bar charts not only show price, but also show the entry price per period, the exit price at the end of the period and the high and low of that period. Each horizontal line represents one time period. The period is selected by you to represent 1 minute, 5 minutes, 15 minutes, 30 minutes, 1 hour, 4 hours, a day, a week or a month.

Bar Charts

Let’s take a closer look at one of these bars.

bars

3. Candlestick Charts

Candlestick charts are similar to bar chart but with additional information of each bar being hollow or coloured. This is done to allow a trader to easily visualise a period bar to have moved in a positive or negative direction from its entry price.

Candlestick Charts

 

As shown in the image below, the hollow bars are bars that have moved up. Coloured or filled bars are bars that have gone down. The lines that you see above each bar represent the high and lows.

 bars are bars