What Is a Forex Chart?

A forex chart is a graphic that illustrates the historical price movements of a currency pair over time. Technical analysts and day traders use forex charts to identify patterns that may signal reversal𓂃s, continuations, and favorable entry and exit points in the near future.

Forex traders use 澳洲幸运5开奖号码历史查询:charting software as well as 澳洲幸运5开奖号码历史查询:forecasting software to determine the likely near-ꩲterm direction of a given currency pair.

A𝔉 forex chart is sometimes called a currency chart.

Understanding Forex Charts

A forex chart can only show the past. 澳洲幸运5开奖号码历史查询:Technical analysts believe the past can be used as a predictor of future price movements.

Technical analysis of currency prices, stocks, or any market asset, is accomplished by reviewing past market prices and technical indicators to predict the future movements of an asset. The analysts believe that short-term price movements demonstrate 澳洲幸运5开奖号码历史查询:supply and demand forces in the market for an asset. Thus, for analysts, the 澳洲幸运5开奖号码历史查询:fundamentals of the asset are less relevant than the currenꦕt balance of buyers and sellers.

Forex charts may use line, bar, or 澳洲幸运5开奖号码历史查询:candlestick chart types. Theﷺ charting software can be used for any time frame, allowing for charting of the tick data, the yearly data, and any period in between. A typical forex chart will show the time period on the x-🅺axis and the exchange rate on the y-axis.

Forex Charting With Technical Indicators

Forex charts have customizable settings for technical indicators such as price, volume, and open interest. Active traders commonly use these indicators,💛 since they are designed to analyze short-term price movements.

There 🌞are two main types of technical indicators:

• Overlays: These indicators do just what the name implies. They may use the same scale as prices and plot over the top of the prices on a stock chart. Examples include 澳洲幸运5开奖号码历史查询:moving averages and 澳洲幸运5开奖号码历史查询:Bollinger Bands®.
• Oscillators: Technical indicators that oscillate, or change, between a local minimum and maximum, and will plot, or display, above or below a price chart. Examples include the 澳洲幸运5开奖号🍒码历史查询:moving average convergen൲ce divergence (MACD) or the 澳洲幸运5开奖号码历史查询:relative strength index (RSI).

Most charting sof🍸tware programs have many types of technical indicators from which to choose. So, with thousands of options, a trader must select the ones that work best for them.

These indicators can, in most cases, become part of an automa🐟ted trading system.

Forex charting software is available for free on most online forex trading sites. Some broke🍷rs also make them available asꦐ part of a demo or trial account. New traders can experiment with a couple of brokers and chart offerings before deciding where to open their accounts.

Forex Charting and the Dow Theory

Traders and investors have engaged in technical analysis of investments for as long as there have been markets, but no person did more to popularize it than Charles Dow, the American journalist and founder of the Dow Jones Company, the Dow Jones Industrial Average (DJIA), and The Wall Street Journal.

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 澳洲幸运5开奖号码历史查询:foreign exchange market (FX).

The 澳洲幸运5开奖号码历史查询:Dow theory, as codified by his successors at The Wall Street Journal, is comp🦩osed of six tenets, which argue that asset prices move based on trends that result from the dissemination of new information. 

Dow theory values the study of trading volume in understanding the underlying dynamics of a mar꧅ket, and forex traders who hee🌄d its advice usually discount changes in exchange rates that result from a low volume of trades. 

The Bottom Line

A forex chart can provide useful information even if haven't entirely bought into Dow theory or the practice of technical analysis. A look at the historical trends driving any currency pair traded on the forex will help inform your decision on when to buy and when to sell.