________________________________________________________

Reading Forex Charts

We previously looked at the basics of reading forex charts and some of the tools such as Fibonacci ratios that people use to make decisions. Now let's take a deeper look at charts and some of the things you can read from them. There are more to forex charts than just lines on a graph, or even candlesticks. There are patterns and indicators that show up over time, and signs that indicate things are about to shift. In this section we'll look further into how to turn raw data into patterns that can help us with choosing when to make trades, and what trades to make.

There are going to be a lot of new terms and acronyms in this section, so if you're not comfortable with them we recommend you get a bit of scratch paper and write them down. As we were writing this course, one of our team commented that he had seen a lot of courses that were written by people who knew a lot about their subject and so they kept explaining things in terms they hadn't defined. That works really well when people know the terms already, but can leave newcomers more than a little confused.

We don't want to confuse you, the forex market can do that on its own, so before we go too deeply into the indicators let's start by going over some of the basics:

[hidepost]You'll see these terms a lot, as many of these indicators are used to determine when the market is either overbought or oversold as the basis for buy or sell orders. These terms come into play when you have a sudden rise or drop in price that can be traced directly to market activity rather than fundamental factors.

The idea is that when prices rise too far and fast the currency is overbought, and people are going to realize that in short order and start dumping it, forcing the price down to a sustainable level. Oversold is the same thing when a price drops. You want to be able to identify these situations because it will give you advance warnings of a likely reversal.

Continue to MACD Now...

[/hidepost]