Forex (Technical Analysis)
Technical Analysis could be a very good tools in the forex market due to the massive volume compare to any other market.
A bar is a vertical line on a price chart. The lowest point of the bar is the lowest price recorded during a trading period and the highest point of the bar is the highest price recorded during that same trading period. A price chart is a two dimensional graph and consists of a horizontal scale spanning from left to right at the bottom of the chart and which measures time. This scale is commonly referred to as the time scale. A bar chart consists as well of a vertical axis spanning from the top to the bottom of the chart which measures price. This latter scale is commonly called the price scale and is located to the right of a chart. These scales are also referred to sometimes as the x and y axes where the x axis measures time and the y axis measures price. A bar can consist of a mark resembling a hyphen (-). When this mark is located on the left side of the bar (the high and low price range) it represents the opening price. When that mark is located on the right side of the bar it represents the price level where a financial instrument closed. When a bar consists of the open, high, low, and close it is referred to as OHLC chart. When a bar does not consist of the opening price and only the high, low, and close are shown, this type of chart is referred to as HLC chart. A bar chart is plotted for a specific time period for which the bar measures the open, high, low, and close prices. There are several time bars. A bar may represent trading activity for 15, 30 minutes, one hour, a day, a week, a month etc. For example, a weekly bar is fully formed when the last trading day of the week is over and reflects the daily price history in the trading days of that week. A weekly bar chart seen on the first day of the week, Monday, bears Friday's date whether there was trading activity during that date or not. The opening price of the weekly bar chart is the opening price achieved on the first trading session of the week. The highest high price attained during the week is the weekly high, the lowest low price is the weekly low, and the closing price of the last trading session is the weekly closing price. A monthly bar chart is formed in a similar fashion as the weekly bar chart and depends also on the daily OHLC price values. A monthly bar chart is not formed based on the weekly bars although it does reflect the price history of the trading weeks in the month. A monthly chart opening price is the opening price of the first trading day of that specific month, the highest daily high during the month is the monthly high, the lowest daily low is the monthly low, and the daily closing price in the last trading day of the month is the monthly close.
Line charts, also commonly referred to as close-only charts. Line charts are constructed by connecting a line through closing prices for a specific trading period that is being analyzed; such as, hour, day, week, and month.
HL LINE CHART
HL line charts are their drawn by connecting the highs and lows prices for a specific trading session.
A price charting technique originally developed by Munehisa Homma, a renowned and extremely successful Japanese rice trader who was an active trader in 1700s. Drawing a candlestick requires the high and low for a time period, like a bar chart. Drawing a candlestick depends also on how the close and the open prices are related to one another. The thick part of the candlestick is referred to as the real body and represents the price range between the opening and closing prices. A real body that is not filled in, that is, hollow, indicates that the closing price was higher than the opening price. When the closing price is below the opening price, the real body of the candlestick is filled in, that is, black. The thin lines extending from the body are referred to as shadows and the highest point of the upper shadow represents the high price in that specific time frame. The lowest point on the lower shadow represents the low price for the period being studied. You can also note that certain candlesticks figure have no shadow or thin lines because the high price was the same as the close or the low price was equal to the open price.
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To learn more about Forex, you should read the book about it below:
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