A forex trader should learn technical analysis. To be able to make a good technical analysis, of course, we must know the charts or graphs that we use in trading. The chart serves to display the price movement of a product in a time frame.

The Y-axis (vertical line) shows the price, while the X-axis (horizontal line) shows the time which is scaled based on the selected time frame. By understanding the chart, we will know how to make short, medium, and even long-term trading plan.

This is so that we can also make better trading analyses. There are three types of charts that are often used in forex trading, namely line, bar, and candlestick charts. These three charts are very useful for forex traders.

Learn Technical Analysis through Candlestick Charts

Candlestick charts are a better variation of bar charts, so they are most widely used by forex traders. The information displayed is the same as the bar chart. Candlestick consists of two parts, namely shadow or wick and body.

Shadows are two vertical lines at the top and bottom. The lowest point of the shadow shows the lowest product price (Low) and the top point shows the highest product price (High) at a time. We can see the high and low price of this shadow. 

To learn technical analysis, you have to know how to read them. If the upper shadow is longer, it means that the buyers in the market are trying to increase the price but to no avail. If the lower shadow is longer, it means that the sellers are trying to lower the price but to no avail. 

The body is the part of the bar in the middle of the candlestick. Usually, there are two different colors for the body. In the example above we use green and red body colors. If the closing price (Close) is higher than the opening price (Open), then the body is green.

Didimax forex broker considers it as buying interest. Conversely, if the opening price is higher than the closing price, then the body is red. This means that the selling pressure is moderate. In candlesticks, the higher price position is always on the top.

So, on the green body, the closing price is above and on the red body, the opening price is above. When the market is experiencing a trend with high momentum, you will see candlesticks with long bodies and short shadows.

And when market conditions are volatile, you will see candlesticks with short bodies and long shadows. Charts are a very important source of information. Get used to regularly seeing chart movements every day, then your ability to make trading analyses will be honed.

Learn Technical Analysis through Line and Bar Chart

The line chart is the simplest one. The line chart forms a line connecting the closing price points. This chart only shows the closing movement, without any other detailed information. Best Forex broker like Didimax will guide you on how to analyze them.

So, the line chart is more suitable to see the trend, whether the price tends to be bullish (up) or bearish (down). Line charts are very easy to understand especially for newbie traders and help you learn forex trading.

Compared to line charts, bar charts contain more information. The lowest point on the vertical line shows the lowest product price (Low) in a time frame. There are two horizontal lines that you will find, namely the right horizontal line and the left vertical line.

The product's opening price (Open) is represented by the left horizontal line. Meanwhile, the closing price of the product (Close) is represented by a horizontal line to the right. The top point on the vertical line shows the highest product price (High) at a time.

Learning how to read and analyze charts will give you an advantage in making trading decisions. As a prospective professional trader, you need to learn technical analysis and also fundamental analysis.