Types of Chart in Forex
There are different methods of trading that can be used to speculate and make market decisions.
The two main elements of foreign exchange market research are technical and fundamental. The FX market is quite unique in comparison to other markets, as 90% of the time, those who are more proficient in reading pure price action can usually get a clear picture of how the price is likely to come next.
There are three main types of chart in Forex trading:
A bar chart gives us a little more information about this. As well as the closing prices, it shows us the opening prices, the highs and the lows for a specified period of time. It can be used to make a much more effective trading decision when deciding the next move of your preferred currency pair.
For example, if you were to analyze the daily bar time frame, that bar would represent 24 hours of price action, which suggests that the whole day’s movement is reflected in that bar. If you want to analyze a lower timeframe, such as 1 hour, that bar would show 1 hour of price action.
Basically, a candlestick shows the same data as a bar chart, but in a visual format that is better for the eyes. The candle shows the height and the depth of the given time period, just as the bar charts do with the vertical line, also known as the wick.
The top vertical line, or wick, is known as the’ upper shadow,’ while the bottom is known as the’ lower shadow.’ The main difference between the candlestick and the bar is how the opening and closing prices are displayed. The block, otherwise known as the’ body’ of the candlestick, indicates the range between the opening and closing prices, while the wicks let the trader know where the price had previously been affected.
The line chart comes in the form of drawing a line from one closing price to the next closing price. It is an extremely simple tool for analyzing the overall market trend, as well as for identifying the level of support and resistance in the forex market.