Technical Analysis Basics: Charting



Charting is really a sub-discipline of technical analysis – however it’s a very big one as nearly every Forex trader will utilize, to some extent, price charts when making trading decisions. The simplicity of charts is their main strength. They convey a huge amount of relevant information very quickly.

Figure 6
Chart showing trend channel
Basic chart in forex

They give a graphical representation of what is going on, and what has happened in a market (see Figure 1). Anyone can look at a price chart, and make a prediction about what the price is going to do next. Chartists look for patterns in price behavior to predict how to trade. The analysis used by experienced traders goes beyond simple “eyeballing” of a chart. A number of specialized techniques and indicators have been developed over the years and are useful under different scenarios.

The most widely used are:

Most traders use a combination of these indicators.

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