Technical Analysis - Reading FOREX Charts
Keywords: forex, forex trading, forex analysis
Price charts can be simple line graphs, bar graphs or even candlestick graphs. These are graphs that show prices during specified time frames. These time frames can be anywhere from minutes to years or any time interval in between.
Line charts are the easiest to read, they will show you the broad overview of price movement. They only show the closing price for the specified interval, they make it very easy to pick out patterns and trends but do not provide the fine detail of a bar or candlestick chart.
With a bar chart the length of a line displays the price spread during that time interval. The larger the bar is the greater the price difference between the high and low price during the interval. It is easy to tell at a glance if the price rose or fell because the left tab shows the opening price and the right tab the closing price. Then the bar will give you the price variation. When printed bar charts can be difficult to read but most software charts have a zoom function so you can easily read even closely spaced bars.
Originally developed in Japan for analyzing candlestick contracts candlestick charts are very useful for analyzing FOREX prices. Candlestick charts are very similar to bar charts they both show the high, the low, open and close price for the indicated time. However the color coding makes it much easier to read a candlestick chart, normally a green candlestick indicates a rising price and a red one indicates a falling price.
The actual candlestick shape in reference to the candlesticks around it will tell you a lot about the price movement and will greatly aid your analysis. Depending on the price spread various patterns will be formed by the candlesticks. Many of the shapes have some rather exotic names, but once you learn the patterns they are easy to pick out and analyze.
Price charts are not usually used by themselves to get the full affect you need to supplement them with some technical indicators. Technical indicators are normally grouped into some pretty broad categories. Some of the more common ones used to monitor and track the market movement are: trend indicators, strength indicators, volatility indicators, and cycle indicators.
Here is a list of some of the more commonly used indicators as well as a brief description.
Average Directional Movement Index (ADX) This index will help indicate if the market is moving in a trend in either direction and how strong the trend is. If a trend has readings in excess of 25 then this is considered a stronger trend.
Moving Average Convergence/Divergence (MACD) This shows the relationship between the moving averages which allows you to determine the momentum of the market. Any time that the signal line is crossed by the MACD it is considered to be a strong market.
Stochastic Oscillator This compares the closing price to the price range over a specific time frame to determine the strength or weakness of the market. If a currency has a stochastic of greater than 80 it is considered overbought. However if the stochastic is under 20 then the currency is considered undersold.
Relative Strength Indicator (RSI) This is a scale from 1 to 100 to compare the high and low prices over time. If the RSI rises above 70 it is considered overbought where as anything below 30 is considered oversold.
Moving Average This is created by comparing the average price for a time period to the average price of other time periods.
Steve Welker
Owner & Operator of www.forex-tradingonline.com
Previous Articles Highlighter:
Do You Have The Right Bedding For Your Baby ? (1)
Any of the styles of beds can be safely used to keep your child save and comfortable. Once you have determined what type of bedding will correctly fit the equipment you have the only other consideration is the pattern and style that you find pleasing.
How To Make The Transition To A Toddler Bed (2)
No matter what you do your child may just not be ready for this change in which case you just need to be patient and wait a few months and try it again.
Learning From Lemons To Invest Your Cash (3)
Your financial condition will decide the scope of your investment prospects. Starting up a small business on the internet probably only needs a little investment but it also needs loads of potential as a business idea.
Career Fair Checklist (4)
Visit its website and pre-register yourself. Make a list of the companies and employers attending the fair. This list will help you to access the companies you are interested in.
Interior Design Careers For Artistic People (5)
Designing interiors is an art that involves shaping interior spaces using spatial volume along with the surface treatment. It draws inspiration from environmental psychology, decoration styles of the past and present, architecture, and designs that infuse a pleasant appeal.
Improving Diagnostic Imaging With Six Sigma (6)
In the 'analyze' phase, related business processes are analyzed for pinpointing the exact cause of the problem. This helps the management in making the necessary changes to the problematic delivery model.
Careers In The Coast Guard (7)
coast guard jobs, military careers, military jobs, coastguard jobs, coastguard A career as a Coast Guard officer in the U.S. demands a conscientious and dedicated approach to the duties and responsibilities that accompany the job profile.
Careers In The National Guard (8)
The members of the National Guard serve the people closest to them and society as a whole. Primary Duties The primary duty of the Air National Guard as well as the Army National Guard is to help protect the people at times of crisis, and serve the country in emergencies.
The Final Touch: Snowboarding Goggles (9)
Don't be afraid to experiment with types of goggles that you may not be familiar with for that extra touch of flair. For more information on snowboarding goggles visit www.snowboarderbasics.com or snow-boards.blogspot.com
Big Picture Of Planning And Starting An Internet Business (10)
If you can write articles, you can blog. When you blog, googles and other search engines will send "spiders" to your site to crawl for keywords. The more you blog, the more the spiders comes.
Newer Articles Highlighter:
FOREX Beats The Stock Market (1)
It follows well-defined patterns, you can also leverage better in FOREX than the stock market. Margin accounts in FOREX run as high as 100:1 which means you only need $1 to buy $100 worth of currency.
FOREX Software: A Critical Element For Success (2)
Since online trading has been around for quite some time now, the brokers have a pretty solid understanding of what the traders need from trading software. There are two primary classifications of software provided by the brokers; web based and client based.
The Benefits Of Using A Treadmill For Your Cardio Exercise (3)
When you use a treadmill you get your exercise right in the comfort of your own home, there is never any worries about inclement weather conditions or even unsafe streets, which is an issue in many areas.
FOREX: Reading Quotes For Success (4)
As the quote price raises it indicates that the base or first currency is growing stronger. This means that a single unit of the base currency is able to purchase more of the quote currency.
800 Numbers Bring Leads - If It Doesn't Cost Anything, They'll Call (5)
Published by the editorial staff of National Tollfree Directory. For more information about the 800 Directory, Toll Free Directory and 800 Numbers, visit The National Tollfree Directory: www.internettollfree.com. Please direct any feedback on this article to editorial@strbusinessmedia.com.
How Much Life Insurance Is Enuogh? (6)
The amount of benefits that your dependents can receive is based on many factors to find out exactly what your family could receive you will need to contact the social security office.
Make Money With This FOREX Strategy (7)
Since many of these tools are similar you will find that the time it takes you to learn a new tool continues to drop as you become familiar with more of them.
Don't Lose Your Money In The FOREX Market - Have A Strategy (8)
Keywords: forex, forex trading, currency trading, make money, forex made easy, forex online The promise of "Easy Money" captures the interest of many beginning traders. You can find offers all over the Internet claiming, "risk free trading", "low investment", and "high returns".
Video Duplication - Preserve, Protect And Produce (9)
This is a fast growing young industry, as video is a powerful working tool for companies, businesses, industry, and educational institutions. The types of videos duplicated today include a great variety, ranging from musicals to specific training subjects, such as gardening, cooking, manufacturing, and many others.
Heat And Pressure? Metal Expansion Joints Are The Answer - Flex Your Joints Or Pay The Piper (10)
Control the flow and keep the operation running at optimal capacity and efficiency. The answer? High quality Metal Bellows Expansion Joints. Expansion joints allow movement of a medium through a piping system while containing the medium, and controlling system pressure.