The art of tracking the Forex market
To work successfully on Forex, you need to be well versed in technical analysis and constantly monitor changes in currency pairs, be able to interpret charts that show market dynamics in real time.
For those who are just starting their way in trading , Forex charts are very important , which are not only good, but also free. They are called online forex charts. They contain data on the prices of currencies. In addition, the information in them is divided according to the time principle. Therefore, a trader can track price changes, both by minutes and by years. This information is reflected on the chart in the form of bars, lines or other images, for example, “Japanese candlesticks”.
The most convenient are line charts. They are easy to understand and reflect price movements sufficiently. Bar ones are a little more complicated, but they provide more information. Each bar shows a change in a certain period of time. The longer it is, the greater the fluctuation during this period. Open and close prices are plotted for each bar. Therefore, you can see how much the price has risen or fallen.
Japanese candlesticks were invented for analyzing rice contracts in Japan. These charts are similar to bar charts. The difference lies in a simpler interpretation. The candlestick chart is based on color schemes. For example, if the price goes up, it is shown in green, and if it goes down, it is shown in red.
Online charts provide quite a lot of information. However, for a complete picture of the market, they must be supplemented with various indicators. These are, first of all, technical indicators such as volatility, strength, trend. In addition to them, indicators are used to predict market movements.
The most popular technical indicators are ADX, MACD, Stochastic Oscillator, RSI. ADX or Average Directional Movement shows how the market is approaching a downtrend or uptrend and how strong the trend can be.
MACD – Moving Average Convergence / Divergence shows the nature of connections between moving averages.
Stochastic Oscillator – reflects the strength of the market or its weakness by comparing the closing prices and prices in a certain time interval.
RSI – Relative Strength Indicator shows the highest and lowest price in a given period of time. When the price level is above 70 it is an overbought state, when it is below 30 it can be said that it is oversold.
Less commonly, traders use indicators such as Moving Average and Bollinger Bands.