Winning Strategies With Forex Charts
Joseph Plazo
As you read forex charts, remember that the two fundamental approaches for online forex trading: fundamental analysis and technical analysis.
Fundamental analysis doesn’t rely on forex charts. It scrutinizes political and economic indicators to determine trades. Charts here are deployed as used as a secondary reference.
Technical analysis on the other hand, attempts to predict price swings by analysis of historical price activity. Those who use technical analysis study the relationship between price and time.
The most actively traded pair of currencies is the Euro and the US dollar, so we will use them in our example. The dollar is on the right hand side of the chart and the Euro is on the left hand side. The currencies are expressed in relationship to each other in pairing. Forex charges will always display how much of the currency on the right hand side is necessary to buy a unit of the currency on the left side. Looking at the typical EU-USD, chart you will notice the last price displayed per given date. This number is always emphasized. The time is tabbed horizontally across the bottom of a chart and the price scale is displayed vertically along the right hand edge of the chart. The time and the price are set in all caps to help the trader remember that technical analysis rests upon the relationship between time and price.
The trader observes the price and time movement on a chart. These include bars, lines, point and figure, and Japanese candle sticks-- the most favored method. With the candlestick method there is a large, red section that is the body of the candlestick. Lines protrude from the top and bottom and they are the upper and lower wicks. When you look at all the candles on a chart it is apparent that bodies come by difference sizes. Sometimes no body exists at all.
The same is true with wicks. Candle wicks come by many difference sizes; there may be no wick at all. The length of the body and the length of the wick are determined by the price range for the candle. Longer candles will have had more price movement during the time that they were open. The top of a candle wick is the highest price for that currency while the wick’s bottom is the lowest price. A currency is bullish when the close of the candle is higher than the open. In simple terms this means that there were more buyers than there were sales during the opening time period. Sometimes the candles will not have wicks. The price opened and it dropped off until it closed.
Forex charts don’t offer bullet proof trading hints, but they can help a trader. Past trends do have their place in forex trading as most traders will admit, and using the charts to track historical trends can assist a trader in making a snap decision.
The online investor typically joins a service that provides realtime charts that updates on currency activity. Charts can be checked on a minute to minute basis. For those who primarily do their trading based on historical accuracy this can ease the burden of prediction.
Most forex traders however use a combination of fundamental and technical analysis. They may chart historical trends, but they will also pay close attention to political, cultural and economic indicators within a region. They might use charts and other techniques to check correlation between political climate and currency fluctuations. But even the most sophisticated technical analysis software or tool has its limitations. A trader must be prepared to take risks… and invest money that is not needed for the immediate future.
About the Author:
A master of manifestation to his associates, Joseph R. Plazo offers intense executive coaching so people can find jobs and build careers.
Read more articles by: Joseph Plazo
This article is distributed by: www.iSnare.com
The latest information and news on Forex:
Forex: USD/JPY retreat contained by 90.15 support - NASDAQ
FXstreet.com The Forex Market
Forex: USD/JPY retreat contained by 90.15 support
NASDAQ
FXstreet.com (Barcelona) - The Dollar has dropped against the Yen European trade and pullback from 89.75/80 week-top has extended below 90.45 intra-day ...
Daily GVI Forex Forex ViewForex Hound
Daily Forex Outlook - S&...
FOREX-Dollar slips on Fed speculation; euro gains - Reuters
Boston Globe
FOREX-Dollar slips on Fed speculation; euro gains
Reuters
By Tamawa Desai LONDON, March 12 (Reuters) - The euro rose to a one-month high against the dollar on Friday as traders covered short positions and the US ...
Dollar extends falls; euro at 1-mth high vs dlrReuters
all 308 news articles...
FOREX-Dollar little changed vs majors in volatile trade - Reuters
Reuters
FOREX-Dollar little changed vs majors in volatile trade
Reuters
... and there's concern that there could be problems in Portugal, Spain, Ireland," said Michael Malpede, market analyst at Easy Forex in Chicago. ...
WORLD FOREX: Dollar Weakens Slightly On Euro After Trade DataWall Street ...
Forex: USD/CAD plunges to 1.0160, 19-month low on strong canadian employment ...
Forex: USD/CAD plunges to 1.0160, 19-month low on strong canadian employment data
Forexrazor
High-Risk Warning Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work ...
Forex: USD/CAD plunges to 1.0160, 19-month low on stro...
Japan finmin says stable forex moves desirable - Reuters
Japan finmin says stable forex moves desirable
Reuters
TOKYO, March 12 (Reuters) - Japanese Finance Minister Naoto Kan said on Friday that markets should determine specific currency levels as long as exchange ...
and more »
foreign exchange - Google News
Pound foreign exchange rates: Friday 12 March - Economy News
Reuters
Pound foreign exchange rates: Friday 12 March
Economy News
Pound Euro exchange rate is lower while Pound Dollar exchange rate is higher in morning trade in London. The GBPEUR os lower by 0.025% with 1 GBP = 1.1015 ...
WORLD FOREX: Dollar Weakens Slightly On Euro After Trade DataWall Street Journ...
Gold Has Less Luster in China - Wall Street Journal (blog)
Telegraph.co.uk
Gold Has Less Luster in China
Wall Street Journal (blog)
Now China's chief foreign-exchange regulator Yi Gang said Tuesday at a news conference during the National People's Congress that ?currently a few factors ...
China's Looking at Diversifying Foreign Exchange ReservesFor...
New finance rules add to squeeze on China NGOs - Reuters AlertNet
New finance rules add to squeeze on China NGOs
Reuters AlertNet
Regulations posted on the website of China's foreign exchange watchdog will require most overseas donations go into special foreign exchange bank accounts. ...
China tightens restrictions on NGOs: ReportZee News
NGOs in China say threat...
Foreign Exchange - Market News International
Foreign Exchange
Market News International
... plans to double US exports will threaten China's global market share, while recommending that government maintain a stable yuan exchange. ...
and more »
Dollar Falls on Speculation Yellen May Help Keep Fed Rates Low - BusinessWeek
Boston Globe
Dollar Falls on Speculation Yellen May Help Keep Fed Rates Low
BusinessWeek
?Yellen is the Fed's extended-period language personified,? said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. ...
FOREX-Dollar slips on Fed speculation; euro gainsReuters
all 30...