For those who want to know more about Foreign currency trading, and to become successful traders, they need to understand the importance of Forex Charts and Technical Analysis. In essence, there are mainly four Forex charts that need extra attentions from traders. The four types are candlestick chart, point & figure chart, line chart and bar chart.
It is quite easy to read line chart. Line chart is an extension of the scatter graph, and it is formed by connecting a series of dots that indicates individual measurements with a group of line segments. On the other hand, bar chart and candlestick chart have some common features, they both display the high and low price for the time period used, coupled with the opening and the closing price. Both patterns are quite useful for price movement observation, and enjoy the favor of the majority of the investors. Preferably, candlestick chart is more popular as they also demonstrate how these prices are relative to the previous periods' prices, so the trader can tell by referring to one bar if the price action is increased or decreased than the prior one. Due to the fact that the candlestick patterns able to transmit a more confirmed news, they are able to create possible trading signals.
Point and Figure chart just focus on the price activity in the currency market, it does not state price against time as all other charts do. The chart is formed by plotting a column of Xs as the price increases and a column of Os as the price decreases. Each square of O indicates a certain price increment. The box of X indicates a price decrement of the same degree. This chart helps to identify the support and resistance level, there is a certain method applied by point and figure trading that rely on these charts.
The reading of these charts are usually available on the currency trading platform given by the brokers. Traders should take up responsibilities on how to read these charts technically to yield the benefits of reading each, and in order to reach prompt decision-making in their Forex tradings.
