Where do we begin? There are countless books, videos and resources explaining the charting landscape so its easy to get overloaded and confused.
Each element of the charting landscape has a distinct appearance. Take time to learn the message that each one displays as they interact with each other and become aware of their limits.
Forex Signals - Proven Forex Signals from the Leading Forex Alert Provider!
First you must select a chart type below we have listed some common chart types and each one has its own useful propreties. The chart is a visual representation in time if we look
at a simple line chart over a one month period we could see that the line would be pointing either up or down.
Now lets say the line chart for the EUR/USD over the past one month is pointing up.
What does this mean , well is you had enter a long position (buy) and held it for a month you would be in a profit area.
How ? Because over the month the EUR would have appreciated against the USD.
Side note be aware this is an example if you intend to hold a forex position overnight then it will be subject to a rollover charge.
All the chart types listed below are good, but as Forex technical trader the most common used chart type is a CANDLESTICK. The most important feature of the candlestick is you can visually see the High, Low, Open, and Close clearly on the chart. Certain candlestick formations seem to almost predict the next price movement, therefore giving you an edge and allowing you to anticipate your next move. So take some time and do some research on Candlestick chart formations.
Next we should add some type of an indicator to our chart in order to help define our trading range, and give us our entry and exit signals. You can set up your chart's with different indicators and test them at any time, but in the begenning use two or maybe three at the most. Focus on understanding the chart formations and each indicator's fuctions. A good place to start would be calculating the PIVOT POINTS and then using the SUPPORT and RESISTANCE levels on multi-time frame charts.
You should toggle between charts frequently. An example would be a 5 minute, 15 minute, and 60 minute Candlestick charts "with your indicator's" setup on your trading platform. Now by toggling between the charts and watching your indicators you can see entry and exit signals as they start to appear. Now using the multi-time approach seems to help paint a much clearer picture.
*Charting is the KEY, so do your own research and get a good understanding of charting and using indicators.
Forex Chart Patterns
Symmetrical Triangles
Ascending Triangles
Descending Triangles
Double Top
Double Bottom
Head and Shoulders
Reverse Head and Shoulders
Forex Trading Styles
Long Term Trading or Investing may use daily charts. (Hold for Days to Weeks)
Swing Trading or position traders may use a 60- minute chart. (Hold for Hours to days)
Day Traders may use a 5 minute chart. (Hold for minutes to Hours)
Scalpers may use a 1 minute chart. (Hold for Seconds to minutes)
