Start With The Forex Chart

Novices to forex technical analysis can be forgiven if they are initially intimidated by it.  At first glance a forex chart can look, well, too technical.  A combination of multiple roller-coaster lines and step-like bars can create a very confusing impression.  And a newbie can be forgiven if they haven’t got a clue as to where to begin.

The Forex Chart On Which Forex Technical Analysis……

The x-axis is the horizontal line at the bottom of the chart.  It is divided into specific time periods.  In general the time period is set for anything from 1 minute to 1 month.  However, it can also be set to the next ‘tick’.  In other words, any time a trade is made, an entry is made on the forex chart.  In a liquid market this can be every second or less.

The y-axis is the vertical line extending from the x-axis on the right hand of the chart.  The values on the y-axis are incremented in PIPs.
Those who have traded equities for any amount of time would expect to see a series of bars along the bottom of the forex chart.  These would have indicated the number of trades made, with each bar corresponding to the price of the currency pair at that point in time.  However, since there is no single market in forex trading, it’s very hard to get an accurate figure for the number of trades.  As a result, there is usually no additional charting at the bottom of a forex technical chart.

Forex Chart Used To Represent Price Properties

At its most basic, the forex chart is used to represent price properties at a specific point in time.  As time passes and trades are made, they are recorded in the chart.  For instance, if you are interested in tracking trades by the minute, then for each minute that passes a record is made that displays pricing information for that minute.

The type of price information that is displayed depends on the type of forex technical analysis you are performing.  Sometimes only the closing price for that time period will be shown.  Or you may be using a forex technical tool that will show the open, high, low, and closing price during the time period.
In addition to this you may want to overlay other forex analytical indicators that will help you determine trends and momentum.  All of these will deepen your understanding but also add complexity to you forex technical analysis.

But the good news about using forex charts for your forex technical analysis is that most are generated automatically and the guidelines for using them are well known and easily learned.