Charts are the starting point of any technical or price action based trader. A price chart is basically a graphical display of price over a specific amount of time. Charts help traders identify a favourable trade opportunity.
1. Line Charts
A line chart draws a line from one closing price to the next closing price. This type of chart displays the general price movement of a currency pair over a period of time.
Here is an example of a line chart for EUR/USD:
Line Chart – Type of Forex Chart
2. Bar Charts
The Bar is a bit more complex, it displays the open and the close as well as the high and low. The bottom of the vertical bar indicates the lowest traded price for that time period, while the top of the bar indicates the highest price paid.
The vertical bar shows the currency pair’s trading range. The horizontal hash on the left side of the bar displays the opening price, and the right-side horizontal hash shows the closing price.
Here is an example of a bar chart for EUR/USD:
3. Candlestick Charts
Candlesticks are easy to read, and are a good place for beginners to start figuring out forex chart analysis. These charts efficiently identify market turning points – reversals from an uptrend to a downtrend or a downtrend to an uptrend.
The idea of the candlestick charting is strictly to serve as a visual aid with colours, since the exact information appears on the bar chart.
Charts give you an in depth look at hundreds of currency pairs. You have the option to change the appearance of most the charts by varying the time scale or chart type and adding new studies or indicators. You can even save your studies and create your own systems as well.