FOREX TECHNICAL ANALYSIS

Basic education on forex technical analysis

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Symbol Bid Ask Spread
EURUSD 1.18714 1.18734 2
GBPUSD 1.38187 1.38212 2.5
USDCAD 1.24410 1.24429 1.9
USDJPY 110.169 110.193 2.4
USDCHF 0.92213 0.92235 2.2
AUDUSD 0.75030 0.75052 2.2
NZDUSD 0.69486 0.69510 2.4
EURGBP 0.85898 0.85916 1.8
EURCHF 1.09478 1.09499 2.1
EURJPY 130.797 130.820 2.3
AUDJPY 82.669 82.693 2.4
GBPJPY 152.259 152.287 2.8
USDSGD 1.34450 1.34494 4.4
XAUUSD 1768.69 1769.04 35
XAGUSD 25.901 25.934 3.3

The above live prices are provided solely for informational purposes, not for trading purposes, and may be delayed.

Technical Analysis

Technical analysis is the framework in which forex traders study price movement. With charts news broadcasts being the primary tool. This is done by comparing current price action with historical price action to identify patterns that can suggest potential price movement.

Technical analysts will try to look for similar patterns that have formed in the past, and will try to form trade ideas believing that price will act the same way that it did before. Technical analysts use charts because they are the easiest way to visualize historical data! You can look at past data to help you spot trends and patterns which could help you find some great trading opportunities.

 

Chart Types

There are 3 types of charts:

Line Chart

  • A Line Chart simply shows a line from one closing price to the next closing price
  • When strung together with a line, we can see the general price movement of a currency pair over a period of time.

Here is an example of a line chart

Capture linechart -1a 600x400
 

Bar Chart

  • A bar chart is a little more complex compared to a linechart.
  • It shows the opening and closing prices, as well as the highs and lows.

Here is an example of a Bar chart

Capture barchart 1a copy 600x400
 

  • The vertical bar itself indicates the currency pair’s trading range as a whole.
  • The bottom of the vertical bar indicates the lowest traded price for that time period, while the top of the bar indicates the highest price paid.
  • The horizontal hash on the left side of the bar is the opening price, and the right-side horizontal hash is the closing price.

 

sample bar upclose
 

Candlestick Chart

  • Candlestick charts show the same price information as a bar chart, but in a prettier, graphic format.
  • A candlestick chart also shows the opening and closing prices in addition to the high and low of the specified period and resembles a candlestick. This type of chart is easier to interpret and identify pivot points or reversals in a trend.

Here is an example of a Candlestick chart

candlestick chart
 

  • However, in candlestick reading, the larger block in the middle, indicates the range between the opening and closing prices.
  • Traditionally, if a block is filled or colored in, then the currency pair closed lower than it opened.
  • In the following example, the ‘filled color’ is red. For our ‘filled’ blocks, the top of the block is the opening price, and the bottom of the block is the closing price.
  • If the closing price is higher than the opening price, then the block in the middle will be “white” or hollow or unfilled but in our example it is filled with green color.


 

 

Once you have familiarised yourself with the information and concepts, you can open a Demo Trading Account to practice what you have learnt and build on your knowledge and understanding of how to trade successfully. Treat your demo account as you would your real account.