4-Forex-Chart-Types,-Chart-Patterns,-Candlestick-Patterns-and-Indicators--by-pegima-education

4 – Forex Chart Types, Chart Patterns, Candlestick Patterns and Indicators

There are different types of chart used in forex trading and these come with advantages and disadvantages. Day traders commonly make use of a bar chart or candlestick stick chart to show additional data than a line chart.

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Bar Charts and Candlestick Charts against Line Charts

Line charts for forex trading

Candlestick Chart ( Best for beginners )

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Bar Chart

Bar charts and candlestick charts illustrate the open, high, low and closing price of every bar. The amount of time or space covered by a price bar is determined by the time frame. The bar and candlestick chart illustrates the price of the initial transaction that took place within the same minute, the maximum and minimum transaction prices during that minute, and the final price of the same one minute period.

Line charts for forex trading

Line Chart

A line chart is, on the other hand, is only used as a final-price- chart. You will still need to choose a time frame like the 1-minute interval, but it will record the closing prices for the one-minute intervals. Each closing price is linked to the subsequent closing price through one continuous line.

Line charts offer a quick rundown of the previous location of the price, but data is not complete because it includes only the closing price of every time interval.

Bar charts and candlesticks charts offer additional data and illustrate the price points at every interval.

Chart Time Frames

Irrespective of the type of chart all forex trading chart charts make use of a time frame. The time frame is the x-axis on a chart, which is commonly the time but may stand for another thing which establishes the amount of trading data they will represent.

Some time frames are time-based, whereas others are based on other pieces of trading data like numbers of trades or contracts and shares. The most well-liked time frames are:

• Time

• Tick (quantity of trades)

• Volume (amount of contracts)

• Price Range

Day traders commonly make use of time or tick time frames, but the time frame is the most common.

Chart Patterns

The favorite chart patterns used in forex trading include the following:

  • Double Top
  • Double Bottom
  • Head and Shoulders Top
  • Head and Shoulders Bottom
  • Falling Wedge
  • Rising Wedge
  • Triple Top
  • Triple Bottom
  • Flag, Pennant
  • Symmetrical Triangle
  • Ascending Triangle
  • Descending Triangle
  • Rectangle
  • Cup with Handle

The chart patterns in this list includes both Standard reversals chart patterns and continuation patterns. However, many of the chart patterns can exhibit either a reversal or a continuation. It all depends on the situation.

Candlestick Patterns

After a while, collections of day to day candlesticks patterns can take a form which can be easily recognized like:

  • Three white soldiers
  • Three black crows
  • Hammer
  • Hanging Man
  • Morning Star
  • Evening star
  • Dark cloud cover

Forex Indicators

The forex indicators used in forex trading include the following:

a) Bollinger Bands

Bollinger Bands indicator is one of the most commonly utilized technical indicators in the currency market. Bollinger Bands are formulated by the famous professional trader, John Bollinger. He came up with a strategy to that makes use of moving average with two trading bands on top of it and underneath it.  The Bollinger Bands indicator commonly shows the present market volatility alterations, verifies the direction and much more.

b) Simple moving average

A simple moving average (SMA) is the average currency price for a particular length of time. The standard in this regards is same as the arithmetic mean. For instance, the 20-day moving average is the average or mean position of the closing prices within the last 20 days. The moving average convergence/divergence (MACD) Forex indicator structured to help to estimate momentum.

c) The 'Relative Strength Index - RSI'

The relative strength index (RSI) is a momentum indicator generated by famous technical analyst Welles Wilder. It places side by side the degree of gains and losses across a particular period. It is mainly utilized to discover overbought or oversold scenarios while trading forex.

d) Fractals

Fractals are trading indicators that work best when utilized together with other indicator types or analysis types. The most popular confirmation indicator that makes use of forex fractals is the "Alligator indicator. This is a tool developed with the use of moving averages that makes use of the fractal geometry.

All the information in the website is for educational purpose only. Your capital may be at risk. This material is not investment advice.

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