Graphic analysis for Forex.

When analyzing financial markets, price movement charts are widely used; one of the ways to study these charts is graphical analysis.

Graphical analysis is a component of technical analysis, a method of studying the market using graphical constructions that make it possible to identify the existing trend and more fully present the picture that has developed over the analyzed time period.

The main tools of graphical analysis are lines and figures constructed with their help.

Support and resistance lines :

A support line is drawn using two or more points representing the minimum price value, forming the lower boundary of the price channel.

A resistance line is constructed using the maximum price values ​​over a given time period and represents the upper boundary of the price channel.

The resulting price channel is used to some extent by almost all Forex strategies .

Trend continuation or reversal patterns.

If you visually examine a currency pair chart, you will notice that the trend creates certain patterns that reveal patterns in its movement. This fact is widely used when forecasting further trend movement.

Trend continuation patterns confirm the existing trend and serve as a signal to open positions in the direction of the existing trend.

Reversal patterns allow you to predict an upcoming change in price direction in advance and provide the opportunity to close existing trades without waiting for a stop loss or trailing stop .

Japanese candlesticks.

Japanese candlesticks are another graphical analysis tool ; this type of chart is currently the most popular among traders.

Even a single candlestick provides some insight into the situation on the timeframe it represents. Furthermore, there are candlestick patterns (combinations of several candlesticks) that can indicate a trend continuation or imminent reversal.

A more detailed description of Japanese candlesticks and trend continuation (reversal) patterns can be found in the book " Day Trading on the Forex Market, " which is available for download completely free.