Graphic representation in forex

Market Analysis

Types of FOREX CHARTS

1. Line Charts in Forex

In line charts price is displayed as a point in the map. The consequent price points connect through a line called price line. This type of chart is characteristic of the trend of the price of the currency but provides little supplemental information. This type of charts is rarely used by modern traders (after reading this book you will understand better why you shouldn’t use this type of chart). Line charts have different time periods. The time period you select is the point to point price period. The bigger time period the wider in time the chart will be. The most popular line chart is the day line chart. Below you can watch an example of line chart.

2. Bar Chart

A bar chart is one of the most popular charts. It contains plenty of information about the price movement of the currency pair. The structure of a price bar is shown in the figure below.The high and low prices are united by the vertical bar. The opening price is marked by a little horizontal line in the left of the vertical bar and the closing price in the right of the bar. With bar charts you have better visualization of the market movements so that’s why bar chart is the first choice for most of the traders. Below you can see a real market examples of bar chart.

3. Candlestick Chart

Candlestick is close related to bar chart but it also contains price direction information. The candlestick bar consists of the body and the shadows.

Opening and closing price makes up the body of the candlestick. When the opening price is lower from the closing price the body is left blank or white. When the opening price is higher from the closing price the body is filled with color (this color depends on the trading platform).

Upper shadows shows the high of the price and lower shadow shows the low of the price for the time span the trader selected in his chart.

Certain candlestick patterns have prediction qualities. Look at the figure below of a candlestick chart in real market environment.