How to Read Forex Charts – Candlesticks for Beginners

Understanding forex charts is a fundamental skill every aspiring trader must master. This guide simplifies the process and introduces candlestick charting for beginners—providing a stepping stone into technical trading with confidence.

1. What Are Forex Charts?

Forex charts are graphical representations of currency pair price movements over time. These charts help traders visualize past behavior, identify patterns, and predict future moves. Common types include line charts, bar charts, and candlestick charts.

2. Why Candlestick Charts?

Candlestick charts offer more information than line charts. They show the opening, closing, high, and low prices of each trading period, helping traders identify market sentiment, potential reversals, and trends at a glance.

Basic Candlestick Anatomy

• Body: The colored portion shows the range between open and close.
• Wicks (Shadows): The thin lines above and below the body show the high and low prices.
• Color: Green/white for bullish (up) candles, red/black for bearish (down) candles.

3. Common Candlestick Patterns

These patterns are popular among traders for signaling potential market direction changes:

• Doji: Indicates indecision in the market.
• Engulfing: A strong reversal signal when a large candle "engulfs" the previous smaller one.
• Hammer & Shooting Star: Show potential reversals at the bottom or top of trends.

4. How to Read and Use Forex Charts

• Select a timeframe: M5, M15, H1, Daily based on your strategy.
• Identify trend direction: Use price action or indicators like moving averages.
• Spot patterns: Look for support/resistance levels, breakouts, or candlestick signals.