The Road to Glory!
Forex market is a place where many people have earned a fortune for themselves. Systematic investments based on proper analysis and understanding can not only kick start the trading carrier of an investor but can also take him or her to the new heights of success. Most of the investors use charts to do technical analysis of the market. These charts are basically the graphical representation of price movement of the currency over a given period of time. These charts not only give fair idea to the investors about performance of the currency pair in the past but also make the market trend clear for clearer investment ideas.
There are mainly three type of charts widely used in Forex markets!
Line chart is one of the most basic types of charts used since the beginning of charting history in Forex market. Line chart is prepared by joining one closing price of the currency with another closing price with the help of straight line. In short in a line chart various closing prices of the currencies are hung together connected by straight lines. This kind of chart can give a fair idea to the investor about past performance of the currency in a given time frame. Line charts are quite popularly used charts as closing price of any currency is considered to be a vital factor for technical analysis of the asset and judging the market trend or sentiment for the asset.
Another chart commonly used for technical analysis is Bar chart. They are not as simple as the line charts but are more complex. Unlike line charts the bar charts not only show the closing price but also shows opening price, high and low price of the currency in a given frame of time. On studying the anatomy of the bar a trader will realise that bar itself represents the currency pair while top of the bar is the highest price paid for the given currency and bottom of the bar represents the lowest price paid for the currency in given period of time. Left side horizontal hash represents the opening price and the right side horizontal hash is for the closing price of the currency.
Candlestick chart is very popular amongst the forex traders these days. Though information provided by the candlestick chart is similar to what is obtained by the bar char but graphic representation of the chart is prettier and much more attractive then of a bar chart. Like bar char this chart also shows the highest paid price and lowest paid price of the currency by single lines but the candle in between or the main body in the middle of the bar shows the range between the opening price and the closing price of the currency. If the middle block is filled with colour in the chart then it is an indication that the currency pair closed at a price lower then what it was opened at.