How to Read Forex Trading Chart

This article shall help you in choosing proper charts, reading and interpreting them correctly, and acting efficaciously in the market accordingly.
The charts comprise of data of 300 periods e.g. hourly chart (12 days’ data), 15 minute chart (3 days), and 5-minute (25 hours). ‘Tabs’ and ‘layouts’ can be used to shift between charts.
Get the information
See this basic video:

1. In the hourly chart observe major support/resistance levels between 2% of the opening rate of the day.
2. In the 15 minutes chart, study the dominant trend, present price with respect to 60 period simple moving average, the high and low since GMT 00:00 and the tops and bottoms during the time period of 3 days.
Interpret the information
1. The hourly chart will indicate whether the intraday trading is up or down. If not vivid right away would indicate a trading range.
2. Confirm the assumed downtrend by 15 minutes chart. Assuming the trend is down in (1), current price must be under the 60 period moving average (MA) with its curve showing downward slope.
3. Check whether current trend is major or minor from the 5 minute chart. For major trend current price is under 60 period MA with downward slope while for minor it is the opposite.
Here you can see full video about forex charts :

Use the information
Now you know the direction of present trend and that whether current trade is in direction (major) of trend or not (minor).
Trading scenarios:
1) Prevailing (major) down-trend while trading in (minor) up-trend: Sell when current price drops lower than 60 MA on 5-minute with downward slope. This is because the next move would probably be down. Also sell just below the lows of the past 0.5 hour (if very close to MA line) rather than below the MA line.
2) Prevailing (major) down-trend in 5-minute chart: Wait for (minor) up trend to come out and reverse before trading again. However, if trade in market still happens through low (of today and 3 days), price action would go down even more. So it would be ok to carry out a short position.
3) Prevailing (major) down-trend in 5-minute chart and just above the day’s low: if today’s low is slightly higher than yesterday’s, a short trade range is indicated by the chart, a more beneficial strategy would be to BUY below the day’s low but with a tight stop. The risk involved is fixed.
4) It is the securest to buy when the bottoms start to get higher which indicates that an up-move is coming.
5) During major up-trends the opposite strategy holds.
Some chart ideas
• Observe the major and minor trends.
• Strategy is to buy above the old tops while sell below the old bottoms.
• Tops and bottoms are higher during up-move and lower in down-move.
• Increase in reactions (minor reversals) means a change in trend.
• An up move generally begins from the 3rd or 4th higher bottom and down move from the 3rd or 4th lower tops.
• When trading against the trend wait till clear indication of a selling/buying point near the top or bottom to put a close stop loss order.
• For intra-day price targets, consider the normal or average daily range.
• Smaller losses and sideways trading indicate the arrival of downtrend while smaller gains and sideways trading may signify a coming uptrend.
• Be prepared till the 4th times of bottoms and tops as the move shifts after that.
• It is an opportunist move to play the break on the “rebound” as the stop may be super tight.
• During up moves, selling close to and with a stop just above the old top or the 3rd lower top is secure. Vice versa holds during down moves.
• Either trade in range or wait for breakaways. Avoid boundaries of trading range for trade.
• Pay heed to the indicators when the market is trading actively.
The limitation of charts
Economic news (expected or unexpected) affects the short-term minor and major trends however the normal daily trading range remains unaffected.