Wouldn’t it be nice if we have a charting system that instead of focusing on the minutes, half-hours, hours, days, and weeks, actually followed and tracked the value by itself? Point-and-figure charts are such charts that do precisely that: they follow the investments.
Point-and-figure charts are charts that follow fluctuations in prices, and not time. Most of the charts are set up on a time scale, and then comparisons are then made between the price as it varies from day to day or hour to hour.
These charts are very different in that can represent any amount of time. There is no set time fixed for each figure. The Movement will only take place when the minimum determined price moves. If the value doesn’t change, then no new markings will appear on the chart.
Now, that when we have understood about FOREX, it’s also necessary for all to know what the different types are of Charts present in it. Generally like other charts, The FOREX charts will have X-Y graph but the time is represented by X-axis & Price by Y axis, thereby showing how the price moves over a period of time.
There are different types of charts; few of those are discussed in brief here.
Line Charts, this type of chart in Forex resembles the closing prices, which is the end price that was recorded for a specific time frame or session.
Bar Chart, All the features present in Line chart are also present in the bar chart except that the construction changes.
The Bar chart consists of two lines instead of one. Here; one vertical line connects the highest price to the lowest price during a particular session. Another Line horizontally connects from the vertical line & move towards the right thus denoting the close. The bar is mostly used in the Forex.
Candlestick Chart, this is an olden technique used by the Japanese & has become popular because the examples shown by candlestick charts have more appeal & the information is easily read. The foundations of a candle stick chart is the Opening & Closing, the high & Low.
We will discuss few methods present in the Candlestick Chart,
Falling Three Methods, this has a bearish type of pattern having a black & long body, three small bodies representing the days & then the fifth day that closes during a low.
Rising Three Methods, this also has a bearish pattern with one long white body, again three small bodies that represent days & lastly the fifth day that closes when it’s low.
Simple Doji, this candlestick pattern forms when the open & close of a Security are assumed equal. The candlestick here will resemble like a plus sign or an inverted cross. Again in Doji, we have two patterns as explained here,
Dragon Fly Doji appears like a long & lower shadow making the candlestick resemble the shape of the Alphabet ‘T’. Another pattern is the Gravestone Doji that resembles an inverted T having an upper shadow.
Hammer, this candlestick has a pattern that shows a small really black body with long & lower shadow. This pattern arises when there is a down or market is hammered.
Harami, this candlestick is formed within the body of an earlier candlestick resembling a pregnant situation.
So, one candle stick looks like having a large body & within that large body, the smaller body is present.
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