A forex market chart is a graphical display of data showing the price movement of a commodity with regards to the causing factors. Just to be clear, a forex chart does not substitute for the required research traders are expected to carry out in preparation for trades. Most of the information displayed on a forex market chart (if not all) is only a summary of the causative factors. To this end, users of any sort of forex chart are advised to apply caution when trading with forex charts, especially new traders.
THE TYPES OF FOREX MARKET CHART
There are three types of forex market charts that can be used to trade the forex market. They are
What exactly are these charts and how are they used in the forex market?
FOREX MARKET BAR CHART:
The forex market bar chart is a graphical representation of price movement in the market with the use of bar charts. The height of the vertical bar shows the trading range of the currency pair in question, with the highest price of the security at the top and the lowest price at the bottom of it. From a glance, one can also tell the opening and closing prices, as well as the fluctuation of prices within the stated time range.
The forex market representation of information on a bar chart may appear to be a bit complex. The more reason why traders need to take their time to study the information on the bar before they can apply it to their trades,
THE FOREX MARKET LINE CHARTS:
This method of analyzing the forex market is as simple as it can be. It is simple a line traced from one closing price of a commodity to the nest closing price, plus a lot of ups and downs in between. The ups and down indicated the price movement of the commodity during inflation and deflation. So, over a period of time, with the forex market line chart, one can tell if the price of a currency is going up or coming down. From it, one can easily spot a pattern related to a commodity. It is quite simple to use, but not detailed.
FOREX MARKET CANDLESTICK CHARTS:
The graphical representation method here is literally what the caption said it is, candlestick-like. Since a literal candle stick is in the form of a bar, the candlestick charts also tend to have notable similarities with the forex market bar chart. The candlestick chart indicates the highest price the security was sold at the upper part of it, and the lowest price at the bottom part of it. The larger block in the middle of a candlestick shows the range between the opening and closing prices.
The body of the candlestick could be filled with color, showing that the commodity closed lower than it opened, or vice versa.
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