how to read currency charts

Create international money transfers, with over 190+ countries available. Now that you know how to read Forex charts correctly, what questions do you have that you would like us to answer? The exception to this is Yen pairs ( i.e. USD/JPY), which are only quoted to two decimal places.

How to predict the forex market?

  1. Identify the trend. The first step in predicting forex charts is to identify the trend.
  2. Use technical indicators.
  3. Look for chart patterns.
  4. Pay attention to support and resistance levels.
  5. Use multiple time frames.
  6. Use fundamental analysis.

Being able to read and interpret forex charts accurately is vital if you want to successfully trade in forex markets. Learning how to read live forex charts, as well as real-time trading charts, will enable you to take control and spot trends, allowing you to make calculated moves to seize opportunities to make money. Forex charts show a period depending on the time frame you select, most forex charts default to a daily time span showing trading data over a 24-hour period.

How to Read a Currency Quote?

This offers an indication of how the currencies may change in the future by monitoring the signals and patterns in forex charts. The second major chart is the bar chart, and as the name implies, it uses bars to show the opening and closing prices of a currency pair as well as the highs and lows. Unlike the line chart, this type of chart gives traders an idea of the price behavior within a specific time period. Some of these tools are necessary for making profitable trades because they give traders an idea of the bigger picture of the market and help to accurately predict the movement of currency pairs. Dow published hundreds of editorials in The Wall Street Journal, many of which espoused his theories on the technical analysis of equity price movements. Today, many forex traders follow his theories as they trade the foreign exchange market (FX).

When the market consolidates for a while, it is basically setting up to break out in one direction or the other. The formation of this bullish candlestick pattern was the signal as to which way the market was about to break. Traders who understand how to read a simple candlestick pattern like the Engulfing Bullish would have known when to enter this trade, and could have profited with this high reward-to-risk ratio setup.


If the forex market is a jungle, then chart patterns are the ultimate trails that lead investors to trading opportunities. When trading financial assets in the forex market, profits (or losses) are made out of price movements. Price changes are usually represented using candlesticks, and after a series of time periods, candlestick patterns form on a trading chart, telling the price action story of the underlying asset. Chart patterns are powerful tools for performing technical analysis because they represent raw price action and help traders to feel the mood and sentiment of the market. They essentially allow traders to ride the market wave, and when well understood and interpreted, they can help pick out lucrative trading opportunities with minimal risk exposure. There are many reasons why traders use forex charting programs while trading.

Otherwise, if you are looking for a more in-depth trading chart where you can integrate technical indicators such as MA, RSI, and Bollinger Bands – then, a candlestick chart is the ideal choice. Do you think a line chart provides enough information to use in your trading strategies? The bottom line, it depends on the way you are going to trade the foreign exchange market. Once you open the candlestick chart, select the best currency pair to analyze. A good currency pair to trade is one that has printed chart and candlestick patterns that meets a trading plan’s rules.

Share IG and get rewarded

Many traders like this chart because not only is it prettier, but it’s easier to read. The “future news’ is now “known news”, and with this new information, traders adjust their expectations on future news. Because simple methods are easier to understand and therefore easier to use when you trade forex. Candlestick Patterns are candle structures formed based on the body, open, close, high, and low of a candle. Follow the guidelines in your trading plan to find a nice entry point. You can enter a trade instantly or set a pending order so the trade can be opened automatically when the price reaches a certain level.

How do you compare currency?

  1. Currency Strength Meter.
  2. Look at the common currency (the US dollar)
  3. Check informative websites.
  4. Currency strength matrix.

This chart type is basically a technical tool, as it combines major principles of EMA technical analysis indicator. Kagi chart has a basic parameter of the trend reversal level that is, by default, 4% of the previous price movement. There are many trading strategies, applying Japanese Candlestick charts. There has even been developed a particular type of technical analysis that is called candlestick analysis. The analysis suggests looking for repeating combinations of similar candlesticks.

Should I Trade the GBP/USD?

For traders who enjoy making use of technical analysis to determine their trading strategies, forex charts are important. A forex chart is a price chart that helps a trader to get the historical data of a currency pair to determine its future price movements, how to read currency charts especially when combined with other tools for technical analysis. It is a visual representation of the movement of a currency pair over a specific period of time, so any asset that has price data can have a chart formed for analysis purposes.

  • In this case, it will be profitable to open a long position (buy) and monitor the trend further.
  • Using a range of charts and interpretations, forex traders can review and reveal trends that can be exploited to present good investment opportunities.
  • A line chart is the simplest type of chart that draws a line from one closing price to the next closing price.
  • It was created in the USA, so it is quite popular in Western countries.
  • It all starts with a currency pair, which tells you the currencies involved in the trade.
  • Let us study the main control panel of the LiteFinance trading platform (live Forex chart).

Below you can see the chart showing how in 2016 after the
British people voted to leave the EU in the Brexit Referendum the GBP fell
off a cliff. This is due to the expectations of the market that Brexit would
be bad for the British economy and the Bank of England would soon cut
interest rates. In fact, less than two months later the BoE indeed cut
interest rates. As you learn to identify and read simple and more complex candlestick patterns, you can begin to read charts to see how you can trade using these patterns. The period of each candle typically depends on the time frame chosen by the trader.

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