How to Read Forex Price Charts
To understand how a currency pair’s price moves, you need a way to view both its past and current behavior—and that’s where charts come in.
A price chart is the first tool every technical trader should get familiar with. It’s simply a visual representation of a currency pair’s price over a specific period of time.
Charts display trading activity within each time period—whether that’s 10 minutes, 4 hours, a day, or a week.
Any financial asset with price history can be displayed on a chart. Since price changes are mostly unpredictable, traders rely on charts to analyze market behavior and manage risk.
The beauty of charts is how visual they are. It’s easy to see how prices move over time, spot trends, and recognize patterns.
On a chart:
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The y-axis (vertical) shows the price.
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The x-axis (horizontal) shows time.
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Prices move from left to right, with the latest data furthest to the right.
A Quick Trip to the Past…
Back in the old days, traders had to draw charts by hand. Thankfully, tech legends like Bill Gates and Steve Jobs made computers mainstream—now charting is just a click away!
What Does a Price Chart Show?
Price charts reflect supply and demand dynamics.
Every buy and sell order—whether from a hedge fund, a central bank, or a retail trader—is combined into one visual. Charts also factor in all known news and traders’ expectations of future events. As new info emerges, expectations change, and prices shift again. It’s an ongoing cycle of news, expectations, and reactions.
Types of Price Charts
Let’s look at the three most popular chart types used in forex trading:
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Line Chart
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Bar Chart
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Candlestick Chart
1. Line Chart
The simplest chart of them all. It connects one closing price to the next, forming a line that tracks the general direction of the market over time.
It’s easy to understand and great for getting a big-picture view of trends. However, it doesn’t show much detail—like the opening, high, or low prices—just where price closed.
That said, many traders consider the closing price to be the most important, and line charts are great for spotting overall trends quickly.
2. Bar Chart (Also Known as “OHLC” Chart)
Nope, this isn’t a chart you’d find at a pub.
A bar chart shows more information than a line chart. Each bar represents a period and shows:
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Open (horizontal tick on the left)
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High (top of the vertical bar)
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Low (bottom of the vertical bar)
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Close (horizontal tick on the right)
Bar charts help you visualize price ranges and volatility—the bars grow when price movements are big and shrink when they’re small.
Each bar is like a snapshot of what happened during that period.
Keep in mind: when we say “bar” in future lessons, we’re referring to one time segment—like one hour, one day, etc.
3. Candlestick Chart
This is just a prettier version of a bar chart—but it shows the same information.
Candlestick charts are popular because they’re easier to read and more visually intuitive.
Each “candlestick” shows:
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A body, which represents the range between the opening and closing prices.
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“Wicks” or “shadows”, which show the highs and lows.
Here’s the color code:
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If the close is higher than the open, the candle is green (bullish).
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If the close is lower, it’s red (bearish).
We use green and red instead of the traditional black and white because, let’s face it, they’re easier on the eyes.
Candlesticks are excellent for spotting trends, momentum, and potential reversal points. They also come with fun names like the “doji,” “hammer,” or “shooting star,” which help you remember what they indicate.
Choosing the Right Chart
All three charts use the same price data, but each presents it differently.
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Line charts are great for simplicity and spotting trends.
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Bar charts give you more detail on price action.
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Candlestick charts offer the same detail as bar charts, but in a more visual and beginner-friendly format.
There’s no “best” chart—it all comes down to what works for you. Some traders use one type; others use a mix depending on the situation.
Final Thoughts
Start simple. Don’t overwhelm yourself with too much data. As you gain experience, you’ll figure out what information helps you make better decisions—and what just clutters your view.
Throughout our lessons, we’ll primarily use candlestick charts, so get ready to see lots of red and green candles!
Let’s keep learning and mastering the art of reading charts—one candle at a time.