Types of forex charts

The use of forex charts is a must in order to have successful transactions and to win money on the foreign exchange market. Is not enough to use some forex charts for the technical analysis, you must do it right so you can predict the market and so to make the best decisions.

There are several different charts that are used to show the currencies’ price evolution. These are: line chart, candlestick chart, bar chart, Heikin-Ashi chart and Renko chart.

The line chart is the simplest chart used in forex, showing the changes of the price using a line. There are different settings available for the line chart, but it is not the best instrument for strong predictions. Being so simple is mostly used by beginners that can identify more easily trends, double tops, double bottoms, head and shoulders and so on. It is recommended that once a pattern is identified on the line chart to check it out on at least one more technical analysis instrument before take any action.

The candlestick chart was invented by a Japanese business man and currently is considered the most reliable chart for the technical analysis. This is why the candlestick chart is the most commonly used chart in forex. On the candlestick chart you can see the high, low, open and close prices.

The bar chart is almost identical to the candlestick, except the shape used. The bar also shows the high, low, open and close prices of each time frame.

The Hekin-Ashi chart looks like a candlestick chart, but the open, close, high and low prices are calculated using the corresponding information from the previous time frame. Because of this feature, the Hekin-Ashi chart is slow and the forex signals are delayed.

Just like Hekin-Ashi chart, the Renko chart was created by Japanese forex traders. The Renko chart uses vertical brick-like boxes to show the price evolution and doesn’t use time frames. This chart is better to be used for confirming the technical analysis results rather than as major source of analysis.

As you can probably guess, the most reliable and exact charts are the candlestick. This is why the candlestick chart is the most appreciated by all forex traders whether is used for swing trading, trend following or long term forex investments.