By: Charley Warady
Forex charts are not scary. You need to get that simple fact into your head to become a successful Forex trader. Forex charts are simple lines drawn on a graph showing what has happened in the past. Whether it is the past minute, hour, day, month, or year, they all have one thing in common: it is the past. A good technician can look at a Forex chart and tell you where you went wrong with that last losing trade. You rarely want to know where you went right on a profitable trade...who cares?! You made money! But all too often it's when the Forex trader loses money that he needs to know why and it is always easy to find a technical guy to point it out for you on the Forex charts
The nice thing about the past, whether it's in Forex or life in general, is that it can be used to help with the future as well. Since we're not interested in life in general, we'll concentrate on Forex for the time being.
The amount of things that can be done with Forex charts is daunting. They even have scary terms such as “Fibonacci”, and “moving averages”, and “oscillators and indicators”, and “Elliot Wave Theory”. And these are only some of the varieties of analysis tools technicians use to keep the common Forex trader confused and out of their face.
These are all great tools, and when learned, certainly come in handy for long term successful Forex trading. But none of them are absolutely, positively, necessary in order to use a Forex chart. All you need is a pair of eyes and a ruler (if you're not using an online Forex chart, where the ruler is supplied by a click or two).
You don't need fancy theories to be able to spot a Forex trend. Take a look at the daily Forex chart for the EUR/USD right now. It doesn't take a genius or a master technician to be able to see the trend is upward right now. And with a little more care, you can see that right now the market is in an interesting area. Back in March, April, and May, this exact area was the source of some major support in the market. Until it broke through it and took a major swan dive.
It's simply logical that, psychologically, the market might show some resistance around these levels (being the previous level of support). And this is without vast knowledge of Einstein's Theory of Relativity, or Newton's Theory of Gravity. So, if you've been riding this trend all the way up, you might want to adjust your stop-loss orders accordingly; or it might be time for some good old fashioned profit taking. And if the Forex market bursts through this area of resistance, you have that trend waiting for you to jump back on.
It's easy to spot that the market isn't quite sure what it wants to do by the lack of range in the daily trading right now. So, the Forex trader wants to be careful right now. If the market isn't sure what it wants to do, it's best to wait until it figures itself out. But it's no reason not to chart a course using the Forex charts available. Even if all you've got is a couple of eyes.