Forex chart is the very first choice each and every traders make in order to learn forex market analysis. Forex chart will provide visual representation of the current and previous prices of all the currency pairs over the years. They can also show the trading activity and these free forex charts are really user-friendly as traders can easily understand them. Therefore, traders use live forex charts so that they can identify and analyze the movements, tendencies, and forex chart patterns of the currency pairs.
Understanding the price movements of the currency pairs in the forex market is very important to become successful in forex. And to make that happen one must need to study about the currency pair movements properly. If you can look over the past and present price behaviors of the forex pairs, you will find it quite easy to understand the moves of forex pairs.
What does Forex Chart Represent?
Forex chart can show you the changes in demand and supply section. They can compile each and every buy and sell transaction of a specific instrument or currency pair at any given time. Forex chart patterns can also incorporates all the available forex news and the future news according to the current expectations of the traders. They can forecast the price shifting and movements before the arrival of future news. Forex chart analysis gathers and blends all the activity of the forex market so that they don’t miss any single information about the current market. And therefore, they can provide the best results about the future activity of the forex patterns trading so nicely and help millions of the traders to make some real cash.
Types of Price Forex Charts
There are different types of price charts but only a few are productive and helpful for the traders. Now let’s take a look at the three most useful and renowned types of daily FX charts:
- Line Chart
- Bar Chart
- Candlestick Chart
Here, we will explain each of the above-mentioned type of forex charts and provide you all the necessary details about them as follows:
Line chart is as simple as it sounds. You will need to draw just a single line from one closing pair price to the very next closing pair price on the chart. When you are done with the lines and they are strung together, you will be able to see the price movement of a specific currency pair over the period of time. Though it seems easy to follow, the line chart may not be able to provide the traders with enough details about the price movement of a specific currency pair within a certain period of time.
From the forex line chart, you will be able to determine that the price of that certain currency pair was closed at X when the period was over. But you don’t have a slightest idea about the other things that happened with that currency pair. Yet it helps the traders to foresee profitable trends more easily and simply. It can also guide you to compare the closing price visually from one closing pair price to the next closing pair price. Line charts usually get a complete view over the price movements of the currency pairs in the forex market.
Line charts show profitable trends the best as well. If you can identify the slope of the line from the chart, then you can easily find the best trends without a hassle. Usually most of the forex traders consider the closing price level to be more important in forex trading than the other criteria. Therefore, they ignore price fluctuations within a forex trading session by only paying attention to the price closings on the forex line chart. Here is a forex graph of a line chart for EUR/USD as example:
Bar chart isn’t as simple as it sounds, rather it is quite complex. It will show you the opening and closing of the prices, as well as the highs and lows. They also help the traders to see the price movement of each period of trading. Bars in bar charts may increase or decrease in terms of size either from one closing to the next or over a wide range of bar charts. The bottom line on a vertical bar of the bar chart will indicate the lowest traded price for a specific time period. On the contrary, the top line of the forex bar chart will indicate the highest paid price. Vertical bars of a forex bar chart will indicate the trading range of the currency pair as a whole.
When the price fluctuations become worse increasingly, then the bars become bigger. Likewise, when the price fluctuations become better, then the bars become smaller. Bars are affected by the price fluctuations and determine the bar size. They do it because of the construction way of each bar. Usually the vertical height of the bars show the traders the range between the high and low price of the bar chart for a specific time. Price bar can record all the opening and closing prices over the period as well as with attached horizontal lines on the charts.
The horizontal lines on the left side of the bar chart reflects the opening price of a currency pair, and the horizontal lines on the right side reflects the closing price of a currency pair. Here is a forex graph of a bar chart for EUR/USD as example:
Candlestick chart is basically a variation of the types of bar chart. Forex candlestick chart will also reflect you the same price information for the currency pairs as a bar chart but in a much organized and prettier format. Most of the traders love to use this forex market chart because of its easy-to-read specification rather for its graphic format. Candlestick chart patterns still can indicate the range of high to low even with a vertical line on the FX charts. However, the bigger block in the middle will indicate the range between the opening and closing prices of the currency pair in candlestick chart bars.
Candlestick chart analysis also help the traders to visualize both the bullish or bearish trends and trades by showing those blocks with multiple colors for better understanding. There are meanings to those colors of the blocks. According to the traditional forex market, if the block is filled or colored in the middle, then the currency pair gets close lower than its opening.
You can check the following example to get a clear view on this topic. Here the filled color is black and for all the filled blocks, the top of the block will reflect the opening price whereas the bottom block will reflect the closing price. When the closing price is higher than the opening price, then the block which is in the middle will be unfilled or will remain white. Some trading brokers don’t use black and white candlestick chart patterns as they look less appealing. Rather they use colored FX charts and blocks for providing an easier look to the traders. Here is a forex market graph to provide you a clear view on this topic:
In order to monitor the forex market, there are several types of price charts which traders can use. But you must be careful while reading the price charts because without keeping things easy and simple, you may find it difficult to cope up. While choosing your preferred chart, always search for the right balance of having precise information on the forex market chart so that you can make good trading decisions while trading in the forex market. But you also need to be careful about not taking very much information for which your brain can get tired and paralyzed which will eventually result in unable to make any decision about forex trading. Finding the right combination in forex patterns is very difficult and different for each and every forex traders. Therefore it is very important to get the basics properly so that you can gain real help from those free forex charts we mentioned in this article.