Even if you are a beginner, this may not be your first time studying up on Forex. There are certain facts that you already know about, but there’s a lot more that you don’t know yet. Compacting every single detail that you ought to know in one single framework would mean leaving out vital details which are of absolute necessity. So, here, what you’ll learn a lot more about is – chart forex.
Foreign exchange is the world’s largest and most liquid market; liquid in the sense that it is the most volatile market from the investor’s point of view. Forecasting on the market is the only way to make a profit out of it and to properly forecast what you’ll need is a proper know-how and tools to make sure you end up on the greener side of things. And as far as knowledge is concerned, chart forex is one of the first aspects which you’ll come across.
What are forex market charts?
Defining something and explaining it are entirely different things; the latter is more important if a proper conceptualization is necessary. You already know that the forex market is all about transactions between multiple currencies in pairs as per their mutual value ratios.
Chart forex is simply the charts which display the current value ratios of the currency pairs in concern. There are numerous currency pairs, each with their own distinct characteristics and governed by numerous variables which are often very specific to each of them. Accounting for every single one of them is something that you need to start learning up.
Chart forex, from the technical point of view, are charts showcasing pair-prices in a manner which can put forth as much possible information in as little time as possible. If you want to understand the information that a chart forex shows on a daily basis, you need to know about the types which are shown.
- Current price quotes – They show real-time price quotes of respective currency pairs. The quotes are refreshed at fixed intervals of time. Forex market charts can show historical price data of a pair; you can modify the chart to show price history for the past 15 minutes, 30 minutes, 1 hour, 5 hours, 12 hours and even days months and years.
- The volume of Trade – These charts also show the volume of transactions of that specific currency pair against time.
- Highs and lows – Highs and lows as per the time-frame are easily depicted in these charts making them very useful for proper historical trend analysis.
- Nature – These charts can show whether the currency pair is undergoing a positive or negative, or in market jargons, bullish or bearish sale pattern. This is one of the most important aspects provided by forex market charts which can provide sound fundamental analysis.
- Pre-loaded Technical Tools and Indicators – Market data from these charts are used by technical tools and indicators and depicted along with the data on the charts themselves. Functions such as make forecasting and analysis easier for traders viewing it.
Fundamental analysis through chart forex:
Although technical tools and indicators are enough for an accurate analysis of market futures and trends, veteran and professional traders often do their own analysis through the most basic types and forms of information which are available to them such as chart forex. This is something which every beginner ought to know before taking the aid of technical tools and indicators.
Here are some of the major technical analysis which can be made through it:
- Trend Patterns as per Live Price Quotes
Forex market charts typically portray up and down price trends generally in green and red colors respectively. These value changes can give you a complete idea on how that currency pair is trending. Here are some basic but important conclusions which can be drawn from just live prices:
Trendline - Coming across a chart forex, you will often see a line drawn connecting the troughs or the lowermost prices. This line depicts the direction of a trend, future trend possibilities, and nature of the market.
Price quotes falling below the drawn trendline shows that the pair in concern is volatile to the point of very high risks. Falling below a registered trendline means that the asset is undergoing a sharp price drop.
Rising trendlines over different periods of time can help in judging future trends. An upward line throughout the day or even over the weeks speaks positively for that currency pair. Consequently, a falling trendline over periods of time means that the currency pair is losing its price value.
Uptrend – A pair registering lows which are consecutively higher than the former shows that a pair is in an uptrend and for an investor like you is a positive sign for investment.
Downtrend – A pair indicating a low which is under the previous one is a pair which is experiencing a downtrend. There are numerous instances where subsequent uptrends follow a downtrend, so there is no reason for you to conclude downtrends to be a cynical affair.
- Trend Patterns as per Live Price Quotes and Volume
Forecasts can also be made accounting for current market patterns of a currency pair against its transaction volumes which are shown below.
Increasing value ratios against depreciating volume means that the pair may be witnessing a future negative pattern and, subsequently, vice versa.
Proportional increases in both price and volume points to a trending and bullish nature of the pair. On the other hand, a proportional decrease in both price and volume stats refer to a bearish nature of the asset.
- Investor Behaviour
There are numerous instances through which you can forecast upon investor behavior. Chart forex, showing both price and volume of transactions can be used to judge how the asset is being traded and will be traded in the future to a large extent. Although instances differ as per the situation, the following illustration may help in giving you a proper idea of how to analyse behavioral patterns as per forex market charts.
Let’s consider that you’re looking to invest in EUR-USD showing trending volumes and a price quote of 1.095. Trends show an all-day high volume so you might ponder on whether the pair will continue in this trend, unlike the price quote. Depending on how the current price stands in comparison to historical data of the previous days, you can judge on whether to invest on it now or later.
The bottom line is that this pair has every chance of an overall bullish session if the price is not in the higher brackets. So buying long in this pair for the day is a good decision to make.
You can get all this just from a logically sound analysis of a chart forex. All you have to do is get your concept and facts straight. Forex is actually easier than it looks once you get the hang of it.
An Experts Advice:
Being a beginner, you have to conceptualize the whole idea which has been mentioned so far. There are numerous factors and variables for a chart forex which are taken into consideration by professionals with the help of technical tools and indicators. You can upgrade to them once you’ve fathomed all that has been mentioned here so far.
You can start trading with a demo forex account first unless you already have one or even a live account. Demo accounts with virtual money and real-time simulated market conditions are provided by numerous international forex trading and brokerage companies such as LiteForex etc. which also provide for chart forex and numerous other services to help you know more of what this $13 million per second trading market is all about.
You know enough to get started by now. Using technical tools are your next step forward. But fundamental analysis of chart forex is the most important thing that you need or rather needed to know about. So, go ahead, take that leap of faith in yourself.
Learn. Invest. Prosper.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.