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Chart reading when you are trading in Forex is a bit different from reading the charts on stocks, because there really is no top or bottom to the chart.  Neither currency will ever be valued at zero, so they can go one way or the other, much further than you might think.

But, at any rate, currency charts are a powerful tool to help you visualize the action of price changes among currency pairs in the Forex market.

The most important thing to remember is that there are trends occurring on every chart, all the time. Whether it's a rally, a sell-off, or consolidation (sideways action), there are trends in every currency pair.

You may be surprised to know that there are even several trends occurring at once, at different time intervals. For instance, on a one-minute chart,

EUR/USD may be going up.  But you take a look at the one-hour chart and it's quite a different picture; the price is going way down.  Both are true.  They are just different trends at different time intervals.

There are many types of charts for you to choose from.  The most popular forms of charts are the OHLC (Open, High, Low, Close) charts and the Japanese Candlestick, or simply Candlestick Charts.

OHLC charts help to easily visualize the image of a trend. Candlestick charts have many patterns and indicators that can be learned through study.  However, you will find that some of their indications are as obvious as those seen on an OHLC chart.

When you are looking at a Forex chart, you will notice a few common things no matter what charting package you are using.  First, the chart will indicate the currency pair, the time frame, and the type of chart (OHLC, Candlestick, etc.).

Next, you will notice either on the top of the chart or at the bottom, the time or interval is indicated.  On the left, or more often on the right, you will see the price.  For EUR/USD, let's say the price is 1.2740.  The Euro is the base currency in the pair, and the US dollar is the quote currency.  This means that each Euro is worth 1.2740 US dollars.

Although it will take time, you can learn a lot about the charts simply by watching them from time to time.  Also, look for charts offering historical data to help you see what patterns have occurred in the past.  You'll find that charts are going to be crucial to your Forex trading goals.

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