An Introduction To Free Chart Pattern Recognition Software For Forex

Forex trading nowadays requires a good knowledge of technical analysis and the ability to track currency pairs by mastering the skill of reading real time or live forex charts. For the beginner this also means locating a source of good real time forex charts. Or, even better, if you can get hold of some free chart pattern recognition software for forex and discover how to use it you will be well on the road to trading with a reasonable degree of confidence.

Online forex charts convey currency price information at specified time intervals which can range from as little as one minute clear up to several years and prices can be plotted either as simple line charts or as bar or candlestick charts giving price variations at particular time intervals.

Line charts are simple to read and give a wide overview of price movements which often shows clearly identifiable patterns in price movements. By contrast, bar charts are harder to read but do give you far more information.

In simple terms, the length of a bar on a bar chart depicts the price spread for a specified period and the longer the bar the larger the variation between high and low prices. The opening and closing currency prices are indicated on every bar so that you can see easily if the price has risen or fallen and just what the variation in price has been. Though bar charts can sometimes be difficult to read, a lot of chart pattern recognition software programs simplify the job of reading bar charts greatly.

Invented by the Japanese to analyze rice contracts, candlestick charts are like bar charts but are a lot simpler to read because they are colored. For example, green candlesticks show rising prices while red candlesticks depict prices that are falling.

The beauty of candlestick charts is that candlestick shapes when seen in relation to each other produce clearly recognizable patterns many of which have been given names like ‘Morning Star’ and ‘Dark Cloud Cover’ and having learnt to identify these patterns it is a simple matter to spot trends in the currency market.

Although a price chart can provide you with a great deal of information about a specific currency pair this is generally supplemented using various 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.

Frequently used forex technical indicators include Moving Average Convergence/Divergence (MACD), Averge Directional Movement (ADM), Relative Strength Indicators (RSI), Stochastic Oscillators, Moving Averages and Bollinger Bands.

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