The Importance Of Free Chart Pattern Recognition Software For Forex
Forex trading today means having a sound knowledge of technical analysis and in particular an ability to track currencies by learning the skill of reading live or real time forex charts. For the novice this also means locating a good source of free forex charts. Or, even better, if you can find yourself some free chart pattern recognition software for forex and find out how it works you will put yourself well on your way to trading with a fair degree of confidence.
Forex charts provide currency price information at particular time intervals that can range from as short as one minute clear up to several years and prices are plotted either as simple line charts or bar or candlestick charts giving currency price variations at specific time intervals.
Line charts are easy to read and give a broad overview of currency price movements which often illustrates well defined patterns in price movements. By contrast, bar charts are harder to read although they do provide much more information.
In simple terms, the length of each bar on a bar chart depicts the price spread for a particular time period and the shorter the bar the smaller the variation between low and high prices. Opening and closing prices are shown on every bar so that you can see easily whether the price has fallen or risen and precisely what the price variation has been. Although bar charts can sometimes be hard to read, a lot of chart pattern recognition software programs simplify the job of reading bar charts greatly.
Invented by the Japanese for the analysis of rice contracts, candlestick charts are similar to bar charts although they are much simpler to read because they are color-coded. For example, green candlesticks show prices which are rising and red candlesticks indicate prices which are falling.
The beauty of candlestick charts is that the candlestick shapes when they are seen in relation to each other create clearly recognizable patterns many of which have names such as ‘Dark Cloud Cover’ and ‘Morning Star’ and once you learn to recognize these patterns it is simple to pick out trends in the market.
Though a real time forex chart can provide you with considerable information about a particular currency pair this information is often supplemented using a number of forex technical analysis indicators including trend, strength, cycle and volatility indicators all of which are used to predict both the movement and volume of the market.
A number of common forex technical indicators include Average Directional Movement (ADX), Moving Average Convergence/Divergence (MACD), Stochastic Oscillators, Relative Strength Indicators (RSI), Moving Averages and Bollinger Bands.