The forex chart is a graphic representation of the historical behavior of relative price movements between pairs of currencies over different time frames. It is important for technical analysts and day traders to examine such charts in order to identify trends and various patterns that can indicate reversals, continuations, entry points, and exits based on trends and patterns.
There is a vertical line plotting the price, while the horizontal line represents the time of day. By choosing a timeframe from tick-by-tick to a whole month, traders have the option of choosing how frequently new data is plotted from a chart on the EnclaveFX Ltd trading platforms.
A candlestick chart, a bar chart, and a line chart are the three main types of charts that forex traders usually choose from. Candlestick charts, bars charts, and line charts are read differently. Personal preference dictates which type of chart you use, though candlestick and bar charts are the most popular as they provide much more information than line charts. The following is a detailed description of each type of chart:
A candlestick chart is a visual representation of pricing information in the form of long, thin bars that resemble flames.
As you select the period of time, each candlestick will display the price movement over that period. A H1 timeframe, for example, will show the price development of each candlestick over that period; the candlestick on the far right, however, will show the actual price for the current period - incomplete.
The next type of chart, Bar chart, which stands for ‘high, low, open, close’, shows exactly the same data as a candlestick chart, but in a different way.
A green line indicates that the price of the pair has increased over the given period, closing at a higher price than it did when it began, and a red line indicates that the price of the pair has decreased over the given period, closing at a lower price than it began.
An analysis of a line chart is different from an analysis of a candlestick chart or a bar chart because it only displays the close price for the period selected. A line is formed by joining the close prices together.
Since the high, low, and open prices for the period are not shown, this is a very simple method of displaying pricing data. Due to this, many forex traders use line charts only when assessing long-term trends, when some of the additional information may not be as relevant as it would be when trading short-term patterns.