Currency Charts and Diagrams

Forex charts are based on market action involving price. Charts are major tools in Forex trading. There are many kinds of charts, each of which helps to visually analyze market conditions, assess and create forecasts, and identify behavior patterns.

Most charts present the behavior of currency exchange rates over time. Rates (prices) are measured on the vertical axis and time is shown of the horizontal axis.

Charts are used by both technical and fundamental analysts. The technical analyst analyzes the micro movements, trying to match the actual occurrence with known patterns. The fundamental analyst tries to find correlation between the trend seen on the chart and macro events occurring parallel to that (political and others).

What is an appropriate time scale to use on a chart?

It depends on the traders strategy. The short-range investor would probably select a day chart (units of hours, minutes), where the medium and long-range investor would use the weekly or monthly charts. High resolution charts (e.g. minutes and seconds) may show noise, meaning that with fine details in view, it is sometimes harder to see the overall trend.

The major types of charts:

Line chart

Point and figure charts

Candlestick chart

Forex chart system

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