Advanced Forex Charts tutorial will help you understand, identify and analyze Forex Charts and its behaviours so that you can make better decisions.
- Understanding Forex market movements
- Recognizing market movement patterns
- Identifying Support & Resistance
when it comes to Forex trading, you might have heard many a times about something called Technical Analysis. What's this Technical Analysis? What does it really mean? Well, to put it in the simplest form, Technical analysis is studying about the market using historical data visualized in many formations such as charts, indicators and analytical tools. What we do in this technical analysis is analyzing historical data such as price variations, price patterns and trends etc.
Mainly there are three market movements that could be seen.
- Up Movement
- Down Movement
- Sideways Movement
To study these phenomenons, we have to learn how we should analyse data and visualize according to the above ways of movements. Using charts is the most common way of visualizing such data. Because, they help us to identify patterns of data within a long period of time.
Market Movement Patterns
Usually, an up movement of a chart describes the rising market and it is called as a Bullish market. The word Bullish comes by the action of a fighting bull that throws it’s opponent higher into the air.
The downward movement of a chart describes the descending market which is called as a Bearish market. The name Bearish comes by the action of a fighting bear that pushes it’s opponent down to the ground.
Trends in Forex analysis can be described in three ways. They are as follows.
- Up Trend (Trend goes up)
- Down Trend (Trend goes down)
- Horizontal Trend (Trend goes horizontally)
When the price of a currency increases along with the time, we could see an upward trend and a downtrend when it decreases. We can visualize this using a multi-time frame that analyses a long period of time. Horizontal trend comes when the price of a currency has very little fluctuation. After a horizontal trend of a currency, a trader must be very careful with its next movement up or down.
Trading Forex is exchanging currency to another currency in a profit motive way. For trading, trader needs to choose a time to enter the market and exit the market. When trade, one needs the currency exchange rate and the bid-ask prices of the currency pair. The value of a currency is always fluctuating and it is hard to identify the pattern of the fluctuation. To analyse the pattern we have to use a time frame displaying zigzag movement of value usually call a chart.
Support and Resistance
Support and Resistance come when a currency’s value goes too low and too high respectively. The value of any currency fluctuates all the time while in some moments it hits a very higher level. In this situation, all traders who own this particular currency, start selling their reserves making the rise of price difficult to continue. Hence the price falls. This situation is called as Resistance. When the value of a currency hits very lower level, traders who want this particular currency, start buying reserves making the descending of price difficult to continue and the price goes up. This situation is called as Support.