| e going to look at some of the different varieties of | | | | while red candlesticks demonstrate decreasing prices. |
| charts used in Forex technical analysis and provide | | | | Candlestick shapes - these shapes, when viewed in |
| some useful guidelines for readings such charts. | | | | comparison with neighboring candlesticks, provide |
| Price Charts contain information regarding FOREX | | | | information regarding market fluctuation. This |
| prices at specific time intervals. Intervals range | | | | information is helpful in analyzing graphs. Different |
| anywhere from one minute to several years. Prices | | | | shapes of candlesticks come as a result of several |
| are usually displayed in the form of line graphs, and | | | | values: price diffusion, and the disparity between |
| occasionally the change over each given time period | | | | prices at the beginning and end of a given interval. |
| is depicted in the form of a bar graph or candlestick | | | | Candlestick patterns have been dubbed names which |
| graph. | | | | correlate with their physical shapes; names including |
| Line graphs are useful for providing a broad overview | | | | 'morning star' and 'dark cloud cover'. When an |
| of price fluctuations over time. They display the | | | | individual learns these shapes, he or she is easily able |
| closing price at the end of the given time period. Line | | | | to find them on a graph, and utilize this information in |
| graphs possess several advantages when compared | | | | identifying tendencies in the current market. |
| to other types of graphs: they are are quite easy to | | | | Price graphs are frequently supplemented with |
| understand and they are useful for finding patterns | | | | various technical indicators. Many of these technical |
| over a long period of time. However, a key | | | | indicators fall into various differing categories. Some |
| disadvantage is that they lack the degree of detail | | | | of these categories include trend indicators, strength |
| possessed by bar and candlestick graphs. | | | | indicators, volatility indicators, and cycle indicators. |
| In contrast, bar graphs provide a greater amount of | | | | Each of these indicators is a tool which can be used |
| information than line graphs. The length of each bar | | | | to predict fluctuations in the market. |
| demonstrates the price difference for the specific | | | | Common technical indicators frequently used in |
| time interval – a longer bar indicates a bigger | | | | FOREX are as follows: |
| separation between high prices and low ones. | | | | Average Directional Movement Index or ADX for |
| Furthermore, each bar contains two tabs. The left | | | | short – this is utilized in to demonstrate if a |
| tab on a given bar displays the price at the beginning | | | | market is entering an upward or downward trend, |
| of an interval, while the right tab demonstrates the | | | | and to indicate the strength of the give trend. For |
| price at the end of an interval. Using this system, it is | | | | the scale usually used by this index, results above 25 |
| easy to see price fluctuations over a given time | | | | indicate a trend with a greater strength than usual. |
| interval, and to understand specifics of the variation | | | | Moving Average Convergence/Divergence or MACD |
| in price. At times, it can be difficult to read bar | | | | for short – this demonstrates the current |
| graphs which have been condensed and printed on | | | | momentum of the market, as well as displaying the |
| paper, but most computerized graphs usually possess | | | | relationship between two fluid averages. A strong |
| a zoom feature, which makes it easy to see the | | | | market is usually demonstrated when the MACD |
| specifics. | | | | crosses over the signal line. |
| Candlestick graphs originated in Japan, where they | | | | Stochastic Oscillator – this demonstrates the |
| were frequently used in order to analyze rice sales. | | | | strength or weakness of a given market by way of |
| These resemble bar charts in that they indicate | | | | comparing a given ending price to a price range over |
| prices at the beginning and end of a certain time | | | | a specific time interval. A stochastic value under 20 |
| interval, as well as the peak and low prices over that | | | | demonstrates a currency that is oversold, while a |
| interval. Furthermore, these charts are color coded, | | | | stochastic value over 80 demonstrates a currency |
| which assists in the ease of understanding. Green | | | | that is overbought. |
| candlesticks are associated with increasing prices, | | | | |