Online Forex Charts, How To Study The Chart Understand How Forex Market Moves: The analysis methods used to predict future market prices in Forex trading can be broadly divided into two types.
One is fundamental analysis, which analyzes based on basic factors and information on economic activities and the supply and demand of funds (flow of funds).
The other is a technical analysis using charts and technical indicators. While fundamentals analysis is generally suitable for medium- to long-term trading, technical analysis can be widely applied from ultra-short-term to medium- to long-term.
Here, we will explain how to use the chart analysis, which can be said to be the leading role in technical analysis.
Online Forex Charts, Basic knowledge of charts
Let’s take a closer look at why charts are essential when trading Forex.
What is the Online Forex Charts?
A Online Forex Charts is a graph that shows price movement. Charts that graph past movements are used not only for Forex but also for stock prices.
As mentioned at the beginning, chart analysis is one of the technical analysis, and it recognizes and predicts market movements from past price movements, price changes, and their positional relationships.
There are several reasons why charts are used for market analysis, but one of them is that they tend to reflect the crowd psychology of investors.
Investors, from individual investors to institutional investors, all refer to the same chart to make buying and selling decisions.
In other words, many investors are aware of similar price ranges as points for buying and selling, so sometimes a large number of buy or sell orders are concentrated and the market price can fluctuate significantly.
Online Forex Chart type
There are three main types of charts: candlesticks, bar charts, and line charts. The most commonly used charts are candlestick charts.
While bar charts and line charts have many users in Europe and the United States, candlesticks are charts that originated in Japan and have users all over the world.
One of the characteristics of candlesticks is that you can easily grasp the strength and direction of the market at a glance.
A candlestick is represented by a single entity and a beard. Among them, the opening price, the high price, the low price, and the closing price are four prices.
You can see whether the price is rising (positive line) or falling (negative line). Four candlesticks, that is, four data are included to form one candlestick.
Candlesticks simply represent a lot of information compared to other bar charts and line charts. It can be said that it is a strength compared to other charts that you can easily grasp a lot of information at a glance by looking at its shape.
The bar chart represents four values with bars. Some traders say that it will gain an advantage in European time because it is often used in Europe and the United States.
A line chart is a line graph created by connecting closing prices, which is suitable for instantly understanding the long-term flow, and is used when comparing multiple stocks.
How to read the FX chart
Next, let’s take a closer look at the basic view of the chart.
Vertical and horizontal axes of the chart
When you open the chart, you can see that the numbers are displayed on the vertical and horizontal axes. The vertical axis represents the price and the horizontal axis represents time.
With these two axes, you can see at a glance how prices have fluctuated over time. The chart has various time axes such as minute bar, hour bar, 60-minute bar, and daily bar.
If you want to see the price movement on the day or a few days with the horizontal axis of the chart short, it is better to use “minute bar” or “5-minute bar”.
By setting the time axis short, you can see the latest price movements. On the other hand, if you want to set the horizontal axis of the chart to a long period, it is better to use “daily”, “weekly”, “monthly”, and “annual”.
“Daily” draws the movement of the day with one candlestick, and weekly moves the movement of the week. The longer the time axis, the more you can see the transition of price movements from the past to today.
The recommended way for beginners is to check the long-term price movements, gradually look at the short-term price movements, and finally check the timeline for your trading. By doing so, the market price can be recognized accurately.
How to read the trend line, downside support line, and upside resistance line
When looking at the Online Forex Charts, there are many cases where the chart rebounds many times at a specific fixed price (push, return), or the chart moves in a certain direction (upward, downward).
By recognizing this pattern early, you can use it as a trading signal, so be sure to keep it down.
A trend line is an auxiliary line drawn on a chart. It is said that there is a trending market that keeps moving in one direction (up or down) and a range market that keeps moving in a specific price range.
A trend line is a line drawn to visualize which of these quotes the price on the chart applies to.
Lower price support line (support line)
The low price support line is the line that connects the low price and the low price. As the name implies, it is used to see if it functions as a support for the downside.
If the price breaks below the downside support line, caution is required as a shift to the downside.
Upper resistance line (resistance)
The upper resistance line is a line that connects the high price and the high price.
As the name implies, it is used to see if it functions as a ceiling resistance as upside resistance.
If it breaks above the upside resistance line, it can be regarded as a shift to the upside.
As mentioned above, there are three trends in the market. By drawing a line, you need to know exactly which trend the current market is for.
The three trends are uptrend, downtrend and flat. The uptrend and downtrend are collectively called the trend market. On the other hand, the flat state is called the range market.
The uptrend is the upward trend of the upward trend, the downward trend is the downward trend of the downward trend, and the flat is the state of alternating up and down a certain price range.
If it is flat, it will switch to an uptrend or a downtrend at some point, so it is important to determine the timing.
Generally, it is said that the up/down trend market is 20% of the total and the flat range market is 80%.
Do you know the volume on the Forex chart?
A trading volume that represents how many transactions have been made within a certain period. For exchange trading products such as stocks, this trading volume can also be an important key to trading.
Then, I will explain whether it is possible to trade while looking at the trading volume even in Forex. From the conclusion, it is not possible to confirm the trading volume (trading volume) on the Forex chart.
Volume refers to the volume of transactions, and as mentioned above, it indicates how many transactions have been made (successful) within a certain period.
It is said that trading becomes more active as this volume increases.
If you look at a stock chart such as stocks, there may be a bar graph showing the volume below the chart.
In some cases, it is used as a trading strategy that involves charts and trading volume, showing how much trading volume was in that period and what kind of price transition the trading showed.
However, it is not possible to check the volume in Forex. This is because, unlike the stock market, the foreign exchange market has a large number of trading volumes and trading participants, so it is difficult to grasp the overall picture.
Furthermore, in terms of the mechanism, the reason is that while stock trading can grasp the whole transaction by exchange trading, FX exchange trading can not grasp the whole transaction by bilateral trading.
Then, it is not that it is possible to grasp the volume at all with Forex. It will be possible to roughly check the inclination of the position and the inclination of the trading participants by using the trading ratio.
However, I would like to keep in mind that it is the trading ratio within the securities company/trader.
Generally, the currency with the highest transaction volume is the US dollar, and the currency pair group called the dollar straight, which involves the US dollar, has a very large transaction volume. Examples include USDJPY, EURUSD and GBPUSD.
This is because there is demand in actual demand such as settlement. Even if you look at the top 5 trading volumes of all trading currency pairs, you can see that they are occupied by EURUSD> USDJPY> GBPUSD> AUDUSD> USDCAD and the dollar straight.
Combining charts with what are called technical indicators will further improve the accuracy of market forecasts. Explain what technical indicators are and what they are.
What is the technical index?
A technical indicator is an indicator that is used in combination in an Online Forex Charts when performing a technical analysis.
You can easily check the overheating feeling such as overbought or oversold, the timing of buying and selling, etc. that can not be seen only by chart analysis.
There are as many technical indicators as there are famous ones to those calculated and developed by yourself, and it is important to find a technical indicator that suits you.
There are two types of technical indicators: a trend system that shows the direction of the trend in an easy-to-understand manner, and an oscillator system that judges overbought and oversold. These may be used alone or in combination.
Check for key technical indicators
- Trend technical indicators
- Moving average line
A moving average is a line that connects the average closing prices of any period (often used for 5, 25, 75, and 200 days). Many of the most famous and used technical indicators are traders.
Various trading methods are using moving averages, and there is a wealth of information on moving averages. It is a recommended index for those who are new to technical indicators.
The moving average can focus on its direction and use the point of change as a trend change, that is, a signal for buying and selling.
Also, by paying attention to the angle of the line, you can check how strong the trend is. Besides, there are signs such as “Golden Cross” and “Dead Cross” that use multiple moving averages
Bollinger Bands is a technical index that measures the fluctuation range (volatility) of the market price from the price for a certain period and statistically derives the fluctuation range of the price.
Bollinger Bands can predict future price movements from past price movements using a statistical method called standard deviation. It is a simple and very popular technical indicator.
RSI is an abbreviation for the Relative Strength Index, which is a technical index that allows you to check how strong the upward or downward momentum is from price movements over a certain period.
It is also an index that can quantitatively evaluate the sharp rise and fall. This is the most famous oscillator-type technical index, so it is an index that you should keep in mind.
The basic usage of RSI is a contrarian sell entry at the timing of the high price range (overbought) when the RSI value exceeds 70.
It is a contrarian buying entry at the timing of the low price range below 30 (oversold).
This standard number varies depending on market conditions and trading methods, so verify and use the optimal number.
MACD is a technical index that can visually grasp the cycle and timing of buying and selling of the market by applying the moving average.
It is said to have relatively high accuracy, and many users use it. It is especially effective in the trend market.
Similar to the moving average line, MACD can be used for breaking above and below the three lines, crossing the reference line called the zero line, and diverging with the chart (retrograde).
How to read the Online Forex Charts is a required subject of technical analysis
From price range to time on a wide time axis from short-term to long-term.
Technical analysis can analyze various elements. The first step in that technical analysis is how to read the chart. If you cannot read the chart, you cannot perform technical analysis.
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