A forex chart is a visual record of currency price movements over time. Every trade you ever place will start with you looking at a chart, so learning to read one clearly is the single most important skill you can build as a beginner.
The good news: charts are not complicated. Once you understand what they show and why each type exists, price action starts to make sense very quickly. This guide takes you through everything you need to know — chart types, time frames, key patterns, support and resistance, and indicators — with no jargon.
Contents
1. The 3 main chart types
Most trading platforms give you three chart types to choose from. Here is what each one shows and when you would use it.
Line chart
A line chart draws a single line connecting closing prices. It is the simplest chart type — easy to read, but it leaves out a lot of information. You cannot see how far price moved during the period, only where it ended up.
When to use it: Quickly checking the overall trend direction over weeks or months. Not suitable for spotting entry or exit points.
Bar chart (OHLC)
Each vertical bar shows four pieces of information: the Open, the High, the Low, and the Close. A small horizontal tick on the left marks the open; a tick on the right marks the close. Bar charts are used widely in professional trading but are harder to read at a glance than candlestick charts.
Candlestick chart
Candlestick charts display the same four pieces of information as bar charts (open, high, low, close) but use a filled rectangular body instead of a bar. The body is colour-coded — green or white when price closed higher than it opened, red or black when it closed lower. Thin lines called wicks (or shadows) extend above and below the body to show the high and low.
2. How to read a candlestick
Each candlestick is a summary of price movement for one unit of time — that could be 1 minute, 1 hour, 1 day, or anything else depending on your time frame setting.
| Part of the candle | What it shows |
|---|---|
| Body (top) | The higher of the open or close price |
| Body (bottom) | The lower of the open or close price |
| Upper wick | The highest price reached during that period |
| Lower wick | The lowest price reached during that period |
| Green body | Price closed above where it opened (buyers won) |
| Red body | Price closed below where it opened (sellers won) |
What candle size tells you
A large body with small wicks means one side — buyers or sellers — was in strong control for the entire period. A small body with large wicks means neither side dominated; price moved sharply in both directions but closed near where it opened. That kind of candle often signals uncertainty or a potential reversal.
Doji candles
A doji is a candlestick where the open and close are almost identical, so the body is tiny or invisible. You are left with just the wicks. A doji tells you the market is balanced — neither buyers nor sellers took control. After a strong trend, a doji can signal that the trend is losing momentum.
3. Choosing your time frame
Every chart has a time frame — the length of time each candle represents. Common time frames are: M1 (1 minute), M5, M15, M30, H1 (1 hour), H4 (4 hours), D1 (daily), W1 (weekly).
The time frame you choose determines the style of trading you are doing:
| Time frame | Candle = | Best for | Typical hold time |
|---|---|---|---|
| M1 – M15 | 1–15 minutes | Scalping | Seconds to minutes |
| H1 – H4 | 1–4 hours | Day trading / swing | Hours to 1–2 days |
| D1 | 1 day | Swing trading | Days to weeks |
| W1 | 1 week | Position trading | Weeks to months |
Using multiple time frames
Many traders analyse the market on a higher time frame first — say the D1 or H4 — to identify the overall trend direction, then drop to a lower time frame like H1 to find a precise entry point. This is called top-down analysis and it is one of the most effective methods for beginners to adopt early.
4. Support and resistance
Support and resistance are the two most important concepts in chart reading. Everything else builds on them.
Support
A support level is a price area where buyers have stepped in repeatedly, preventing the market from falling further. Think of it as a floor. When price drops to a support level, there is historically more demand than supply at that price — so price bounces upward.
How to identify support: look for a horizontal level where price has reversed upward two or more times. The more times it has held, the stronger the level.
Resistance
A resistance level is the opposite — a ceiling where sellers have consistently overpowered buyers, preventing price from rising further. When price approaches resistance, supply outweighs demand and price turns back down.
Role reversal
One of the most reliable phenomena in chart analysis is role reversal: when price breaks convincingly through a support level, that old support often becomes new resistance. The same works in reverse — broken resistance becomes future support. Watching for these flip points gives you high-probability areas to watch.
Trend lines
A trend line is a diagonal version of support or resistance. In an uptrend, connect two or more higher lows with a straight line — this is an uptrend support line. In a downtrend, connect two or more lower highs — this is a downtrend resistance line. When price breaks a trend line, it often signals a change in direction.
5. Key candlestick patterns beginners need
Dozens of candlestick patterns exist, but most are either rare or unreliable in isolation. Focus on these five first — they are common, easy to recognise, and widely respected.
Engulfing patterns
A bullish engulfing occurs when a small red candle is immediately followed by a large green candle whose body completely covers the red one. It signals a potential shift from selling to buying pressure. A bearish engulfing is the mirror image — a small green candle followed by a larger red one — signalling potential selling ahead.
Pin bar (hammer / shooting star)
A hammer has a small body at the top and a long lower wick — at least twice the body length. It forms at the bottom of a downtrend and signals that buyers pushed price back up strongly after an initial sell-off. A shooting star is the inverse: small body at the bottom, long upper wick, found at the top of an uptrend — sellers overwhelmed buyers and drove price back down.
Doji at key levels
A doji by itself is neutral. But a doji that forms right at a known support or resistance level is worth paying close attention to — it shows that the balance of power shifted at exactly the level where you expected it to.
Inside bar
An inside bar is a candle whose high and low are both contained within the range of the previous candle. It represents a pause — the market is consolidating. A break out of an inside bar in the direction of the prevailing trend is often a good entry signal.
Three white soldiers / three black crows
Three consecutive green candles closing progressively higher (three white soldiers) signal strong buying momentum. Three consecutive red candles closing progressively lower (three black crows) signal strong selling. These patterns are most meaningful after a period of sideways movement or after a reversal signal.
6. Indicators: when to use them and when not to
Indicators are mathematical calculations applied to price data that are displayed on or below your chart. They can help you confirm a trade idea — but they are derived from price, which means they are always lagging. Price moves first; indicators react second.
Moving averages (MA)
A moving average smooths out price data by calculating the average closing price over a set number of periods. The 50-period and 200-period moving averages are the most widely watched. When price is above the 200 MA, the long-term trend is considered bullish. When it is below, the trend is considered bearish. When the 50 MA crosses above the 200 MA — called a golden cross — it is a widely cited bullish signal. The reverse is called a death cross.
RSI (Relative Strength Index)
The RSI measures the speed and magnitude of recent price changes on a scale of 0 to 100. A reading above 70 is traditionally considered overbought — price may have moved too far, too fast. A reading below 30 is considered oversold. RSI is most useful for spotting divergences: when price makes a new high but RSI fails to — that divergence can signal weakening momentum before a reversal.
Bollinger Bands
Bollinger Bands plot two lines above and below a moving average, based on standard deviation. When the bands are wide, volatility is high. When they are narrow, the market is quiet — often a sign that a breakout is approaching. Price touching the upper band is not automatically a sell signal, nor is touching the lower band a buy signal; look for confirmation from candlestick patterns or other levels.
MACD
The MACD (Moving Average Convergence Divergence) shows the relationship between two moving averages. When the MACD line crosses above the signal line, it is a bullish signal. When it crosses below, it is bearish. Like RSI, divergences between MACD and price are often more valuable than the crossover signals themselves.
7. Brokers with good charting tools
Learning on a demo account before risking real money is strongly recommended. The brokers below are regulated by CySEC, FCA, or ASIC and offer MT4, MT5, or proprietary platforms with full charting capabilities.
| Broker | Regulation | Min. deposit | Charting platform | Free demo | |
|---|---|---|---|---|---|
| Pepperstone | FCA, ASIC, CySEC | $0 | MT4, MT5, cTrader, TradingView | Yes | Visit |
| XM | FCA, CySEC, ASIC | $5 | MT4, MT5 | Yes | Visit |
| eToro | FCA, CySEC, ASIC | $50 | eToro WebTrader | Yes — $100k virtual | Visit |
| AvaTrade | ASIC, CBI, FSA | $100 | MT4, MT5, AvaTradeGO | Yes | Visit |
| IC Markets | ASIC, CySEC | $200 | MT4, MT5, cTrader | Yes | Visit |
74–89% of retail investor accounts lose money when trading CFDs with these providers. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
Looking for a more detailed comparison? See our full guide: best forex brokers for beginners or best forex brokers 2026.
8. Frequently asked questions
What is the best chart type for forex beginners?
Candlestick charts are the most widely used chart type by forex traders at all levels. They show the open, high, low, and close for each time period and make price action patterns easy to spot. Most brokers include candlestick charts as the default view on MT4 and MT5.
What does a candlestick tell you?
A single candlestick tells you four things: the opening price, the highest price reached, the lowest price reached, and the closing price for a given time period. A green body means price closed higher than it opened — buyers were in control. A red body means price closed lower — sellers dominated.
How do I find support and resistance on a forex chart?
Look for price levels where the market has reversed multiple times. If price has bounced upward from the same level two or more times, that is support. If price has repeatedly fallen from the same level, that is resistance. Draw a horizontal line at those levels and watch for the next reaction when price returns to them.
What time frame should a beginner use?
Beginners are usually better served starting on the 1-hour (H1) or 4-hour (H4) chart. These filter out a lot of random noise seen on shorter charts, give you more time to think before placing a trade, and are still active enough to provide regular opportunities.
Do I need indicators to trade forex?
No. Many professional traders use price action alone — reading candlestick patterns and key levels on a clean chart. Indicators can be helpful for confirming a trade idea, but too many leads to confusion and contradictory signals. Start with price action, then add one or two indicators if needed.