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The starting point of effective analysis begins with calculating the data and then showing that data in the most meaningful way possible. From the chart which mostly just has time and prices on it to start with, you can start placing specific indicators that will allow you to highlight signals that you are waiting for. The normal candlestick chart uses color to highlight the difference in positive and negative movements. The usual colors are green for a bullish movements and red for a bearish one. The individual candlestick body illustrates the starting and closing price of that particular session. The different colors represent a bull or bearish session. The lines that usually appear extending both above and below the body, signal the high and low points of the price in the session and are known as shadows. On the occasions that no shadow is showing it illustrates a session where the final price at the close was the highest or the lowest in the period covered by the candlestick clearly depending on the color of the body. To give you some idea, there are over of 20 chief patterns that are mainly used by professionals. It would be in your best interest to learn these patterns and what they mean when they appear. This is only the starting point for getting the information necessary to successfully predict trades. Additional indicators must be used in conjunction with the chart patterns to get a clear view of direction. Bollinger Bands - This indicator provides a relative definition of a high and low. Fundamentally this consists of 2 bands which define the high and low price, clearly the upper band denoting a high price. The signal is stronger the nearer the price line moves towards the bands. The closer to either band increases the chance of a trader taking action and trading. Depending on if it is the upper or lower band will mean a buy or sell order. An alternative stratregy is to buy if the price breaks above the upper band and sell when the price falls below the lower band. These signals and indications must be analysed and used by the trader to help their overall trading strategy. The Relative Strength Index is a further popular indicator to use. Here the strength and weakness of the price line is illustrated, calculated on closing prices of completed time periods. When the chart shows the currency price closing higher this signals a strong market and if it closes lower it indicates a weaker market. The Moving Average Convergence / Divergence (MACD). This indicator highlights the difference between a fast and slow moving average of closing prices. This particular indicator deals with trends and clearly signals a reversal in trend when the MACD line crosses 0 on the chart or crosses the price line or if there is a divergence with the price line and the MACD line. If the MACD line is travelling upwards at the time of crossing the price line, a buy signal is evident. If moving downwards then obviously this points to a sell signal. There are other signals that can be taken from the MACD indicator according to the distance between lines and their direction. Above are just a couple of important indicators but in order for you to be a successful trader you will have to get very knowledgeable with these and much more unless you choose a forex robot to take all of the hard work out of your hands. Dan Jones is an expert forex trader and in his spare time likes to help out fellow forex traders that are just staring out in the forex market. He knows you need a lot of information at the beginning, especially if you are going to avoid the many expensive pitfalls that are out there. Find out more about forex trade signals at http://www.winningforexrobotreviews.com
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