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Every trader needs to know how to read forex charts. Chart reading is the most important skill for effective forex trading, whether you're a newbie attempting to figure out how prices change or an experienced trader improving your entry and exit strategies.To read charts like a pro, you need to know not only how to spot price patterns but also what market psychology and technical indications say about where prices are likely to go next. Main Types of Charts To read charts like an expert, you need to know what how three main types of charts work. Line Charts The line chart is the simplest way to show how prices move. It links together a number of closing prices over a certain period of time, usually giving you a clear, uncluttered picture of the overall trend. It is great for finding important support and resistance levels and figuring out which way the market is going, but it doesn't go into much detail. Before looking at the detailed data, pros often utilize the line chart to confirm long-term patterns. EURUSD pair on a 1D chart shown on a line graph Bar Charts The bar chart has more information than the line chart since it shows four important price points called the Open, High, Low, and Close (OHLC): High and Low: The top and bottom of the vertical line reflect the overall price range for the time period. Open: A little dash that goes to the left of the vertical line. Close: This is a little horizontal dash that appears to the right of the vertical line. EURUSD 1D chart shown on a bar chart. Source: TradingView The bar chart makes it easier to see changes in volatility and momentum. A long bar means that prices are moving fast and are quite volatile, whereas a short bar means that prices are staying close together. Candlestick Charts Most expert forex traders use the candlestick chart because it tells a tale with a lot of detail. The OHLC data is also shown in a more by each candlestick, or "candle": The body: The thick middle section that reveals how far apart the open and close prices are. The wicks: The thin lines that go up and down from the body, showing the highest and lowest values that were attained. The color of the body is critical. A green or white body (bullish candle) means that the closing price was higher than the opening price, which means that people are purchasing. A bearish candle with a red or black body means that the closing price was lower than the beginning price, which means that there was pressure to sell. Candlesticks give you quick information about momentum and sentiment. Timeframes A professional never uses only one time period. They employ a multi-timeframe analysis technique to check everything thoroughly.MTFA stands for Multi-Timeframe Analysis. They include: High Timeframe (Daily/Weekly): Used to find the main trend and set important support and resistance levels. This gives the market a "big picture" view. Intermediate Timeframe (4-Hour/1-Hour): Used to watch how the price moves within the trend and find possible trading setups. Entry Timeframe (15-Minute/5-Minute): Traders use this timeframe to make sure that transactions are executed at the right time by confirming candlestick patterns or breakouts. MTFA makes sure that trades go in the direction of the main long-term trend, which greatly raises the chances of success. Resistance and Support Support and resistance are important price levels where the market modifies how it acts. Support is like a floor that keeps the price from going down any more, and resistance is like a ceiling that keeps the price from going up any more. When a price keeps bouncing off a support level, it means that there are a lot of buyers in that area. When prices can't break through resistance several times, sellers are also in charge. In order to identify new trading opportunities, professional traders keep an eye out for "breakouts," or price ultimately breaking through certain levels. Traders can better plan their entry, exits, and stop-loss placements by drawing horizontal lines or utilizing Fibonacci retracement tools to find important support and resistance areas. Technical Indicators The chart shows the raw price action, but indicators help reinforce the story. Indicators are not signals on their own for pros; they are filters and confirmations. MACD (Moving Average Convergence Divergence) uses histogram crossovers and a signal line to track momentum. When there are divergences (price highs and MACD lowers), it means that the market is running out of steam.RSI (Relative Strength Index) shows whether an asset is overbought (a reading above 70) or oversold (a reading below30). Pros buy RSI divergences when the market is going up. Bollinger Bands show how volatile a market is. When the bands squeeze, it indicates an imminent breakout, and when they touch it shows extremes. What is the primary purpose of a Line Chart in forex analysis? Line charts offer an uncluttered view to confirm long-term trends and identify major support and resistance levels. How does a professional trader use Multi-Timeframe Analysis (MTFA)? Pro traders use high timeframes e.g Daily) for the main trend and lower timeframes e.g., 15-Min for precise entry. What do support and resistance levels indicate? Support represents a price floor where most of the buying occurs. On the other hand, resistance acts as a ceiling where selling pressure prevents prices from rising further.