You may have heard the term chart before in the Forex market. There are many Forex charts and each chart has its own way of dealing with it in terms of the ability to analyze and know the opening and closing times of the session in each time frame. The Forex chart that is appropriate for you will help you achieve profits through Forex by analyzing the market in a good and correct way.
Forex Charts and Their Importance in Trading
1 – How many types of forex charts are there in MetaTrader?
There are many types of forex charts but the most popular charts used by traders are: Candlestick, Bar, and Line charts
These are the most popular Forex charts in MT4 and MT5 because these charts were released with the MetaTrader 4.
Bar chart
The Bar chart contains four basic lines, which are somewhat similar to the Candlestick Forex chart, as these lines represent the opening price, the closing price, the highest price reached by the pair, and the lowest price.
Bar chart
Line charts
Line charts are just one line and represent the current price. There is not much data that line Forex charts can give you and it is difficult to read the chart using line charts.
There are some traders who prefer this type of Forex chart because they can draw trend lines based on the highest and lowest price that the pair reached. With line Forex charts, you can specify whether it will be drawn on the opening price only, the closing price, or the average of the opening and closing price.
This may be a good feature for those looking for different analysis methods than other traders, but it is not very popular because it does not support most of the known analysis methods, and the line charts do not have a lot of information that you can make a buy or sell decision based on.
line chart
Candlestick chart
The candlestick chart is one of the most famous and important tools among traders because this Forex chart helps traders in their analysis and it is easy to analyze using this type of chart.
Candlestick chart is also a good tool for analyzing the market during strong news for traders.
candlestick chart
One of the most important reasons that make the candlestick Forex chart popular among traders is the ease of reading the candle, such as the opening price of the candle, the closing price, and the highest and lowest price. You can know all this information by simply looking at the candle just once, The candlestick Forex chart is one of the simple charts that does not hurt the eye and gives you good data that helps you in the analysis.
These prices vary from one candle to another. Bullish candles are completely different from bearish candles in terms of the opening price and the closing price.
candlestick
This image shows the opening price of the bearish candle, the highest price, the lowest price reached by the candle, and finally the closing price. The closing price cannot be higher than the lowest price, because in this case it will not be a bearish candle and will become a bullish candle.
bullish candlestick
As for the bullish candle, it is similar to the bearish candle in the highest and lowest price because the highest price for the bearish candle was formed during the period of the bullish candle and the opposite is also true for the bullish candle, as the lowest price reached by the bullish candle was during the period of the bearish candle because it is the one that pushed the prices down, but the buyers overcame the sellers and it became a bullish candle.
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But the opening price and the closing price are completely different. As you can see, the opening price is always after the closing price for both candles and the bullish candle, the opening price is always below the closing price. If the opposite happens, the candle will not be bullish.
But there are candles that you may see where the closing price is the same as the opening price, and this happens mostly. This candle is important to analysts because it indicates the possibility of a trend reversal, and it is possible that the highest price and the lowest price are the same as the opening and closing prices, meaning that the candle has never moved, but it is difficult to see such candles in the Forex market.
Price action
The candlestick chart helps traders analyze the Forex chart with high efficiency. One of the analysis methods used by traders is price action. This method depends on reading the Japanese candlestick Forex chart and reading each candle, as each candle contains secrets and valuable information for traders.
Among these secrets is knowing the dominant forces in the market through price action Either Bullish or Bearish, as each candle can give many signals that reflect the buying and selling momentum of traders. For example, there are types of candles that indicate a reversal or continuation of the trend, and these candles are used by analysts as a main signal to enter their trades.
Candlestick patterns
There are many patterns that you will find in the candlestick Forex chart that give strong information to traders, and based on that information, a decision is made to enter the sale or purchase. Among these patterns are
candlestick patterns
Bearish Harami
To look for the Bearish Harami pattern, try to focus on the body of the bullish candles. Thus, if you see a bullish candle followed by a bearish candle that completely contains it, the bearish candle must be in the same range as the bullish candle and not go outside this range. If these conditions are met, then this is a Bearish Harami candle.
If this pattern occurs, this indicates the weakness of buyers in pushing prices up and also the weakness of sellers in pushing prices down. The trend may change or continue, as this is not a definite sign of a decline, but rather this is a sign that reflects the Buyer’s and Sellers’ power in the market, But a Reversal is likely to occur after this pattern because it is a largely Reversal signal.
Bullish Harami
The same applies to the Bullish Harami. In this case, you will look for bearish candles followed by a bullish candle. If the bearish candle contains the entire bullish candle, then this is a good Bullish Harami pattern and this pattern may reflect the upcoming price movement.
Doji
As for the Doji candle, you will recognize it very easily because the opening price is the same as the closing price. This indicates that whoever was controlling the market and pushing the prices down or up could not make the candle close at the level he wanted. For example, if the Doji candle has a high Wick upwards, this indicates that the buyers could not push the price up and the sellers were stronger than them.
This is a good sign of a weak trend. It is not necessary for a Doji candle with a bullish Wick to appear at the end of an upward trend. This pattern may occur at the end of a downward trend too. This candle is very strong and the trader may rely on it as an important sign of a trend reversal.
It is also possible to read the candle and know who controls the market. If the candle has a large Wick pointing downwards, this indicates a weakness in selling power. This signal is strong if it appears in a strong demand area. You can combine this signal with your analysis too.
Marubozu
The Marubozu candle is one of the strongest price action signals. If the candle is bullish, this is a signal of a continuation of the upward trend or a reversal of the downward trend to an upward one. You will also find the Marubozu candle in the Forex chart easily because it does not have any Wicks (tail). The opening price is the lowest price and the closing price is the highest price too.
You can trade with the Marubozu candle after you first determine the supply and demand areas because if the Marubozu candle appears before the bounce zone, the price may ignore it and pass it until it reaches the order block area or the supply and demand area from which it will bounce. Therefore, you must first look for a good area to enter, and do not rush to enter immediately when this pattern appears.
Bullish Engulfing
The Bullish Engulfing pattern is the exact opposite of the Harami pattern because in the Harami the first candle is the one that engulfs the second candle, while in the Engulfing pattern, the second candle is the one that engulfs the first candle, but the signal is the same. If the Engulfing pattern occurs, this indicates a reversal of the trend.
This signal is very strong in the reversal of the trend and you will notice at the end of most upward trends the presence of Bullish Engulfing and the opposite is true in the Bearish trend you will find Bearish Engulfing and this pattern is a bearish candle that engulfs the bullish candle that precedes it
The second candle must completely engulf the first candle. It is not necessary to engulf the tail as well. The important thing is that it engulfs the entire body. In this case, this is a strong signal of a trend reversal.
Hammer
The hammer candle is also known as the hanging man and this pattern will be noticed at the end of any uptrend or downtrend. This is a strong indication of the weakness of buyers or sellers who have been controlling the market for a long period of time.
The hammer candle is easy to see on the Forex chart because it has a large downward wick and a very small body. At first glance, you might think it is a doji candle, but the Doji candle is somewhat different because the open and close prices of the doji are the same. This is not the case with the hammer.
Tradingview Forex charts
These charts are familiar to traders, but after the continuous development that occurs in the world of trading, many charts have been added that may be useful to different traders who use many methods of analysis. For example:
There is Area, HLC, Baseline, Columns, High-Low Heikin Ashi, and more.
You will find all these charts in Tradingview, some of which are free and some of which require a paid membership in Tradingview in order to be able to use them, but the candles chart is the most famous among them. You can use it, as it’s free and good.
tradingview charts
Choosing the Right Chart for Your Trading Style
Choosing the right chart for your strategy is very important. It is not necessary to choose the candlestick chart. Your strategy may be better with the line chart or the bar chart. You must first determine whether your strategy works well with any chart in order to be able to apply this strategy, But since the candlestick chart respects most of the analysis methods, you will most likely like this chart.
Conclusion
There are many types of forex charts in the market, and this is due to satisfying different traders with different methods of analysis, but among these Forex charts that are easy to use and widespread among traders is the candlestick chart because it is easy to read and has many ways through which you can make buying and selling decisions, and also the candlestick chart respects most of the known methods of analysis.
