Key Takeaways
- If you’re learning how to read forex charts, start simple: use candlestick charts for analysis and flip to a line or mountain forex chart to confirm trend.
- Choose a timeframe that matches your schedule. H1/H4 are beginner-friendly; still map support/resistance from higher timeframes before drilling down.
- Keep indicators minimal: EMA 20/50 for direction and pullbacks, RSI (14) for momentum context. That’s enough chart analysis to begin.
- Master five patterns first. Engulfing, Pin Bar, Inside Bar, Double Top/Bottom, Break & Retest, and only trade setups that match your written rules.
- Size every trade before entry: risk a fixed % (e.g., 1%), set stop distance in pips, then compute lot size so risk = % × equity.
- Practice safely on a MultiBank Demo Account; when consistent, compare Account Types, review Trading Conditions, trade on MT4 or MT5, manage positions with the MultiBank App, then open a Live Account with small size.
- Track improvement like a pro: win rate, average reward-to-risk, expectancy, max drawdown, and journal compliance. Iteration beats intuition.
If price action feels like another language, a forex trading chart is your translator. This guide covers how to read forex charts, pick the right trading chart, and build practical chart analysis habits so you can actually read forex charts and act with confidence.
Types of Forex Charts (including Mountain)
Different chart styles present the same data in different outfits. Use the one that clarifies decisions, not the one that looks coolest.
- Line Chart: Connects closing prices only. Great for de-noising and seeing the primary drift quickly.
- Bar Chart (OHLC): Each bar shows the open, high, low, close. Excellent for detail without color bias.
- Candlestick Chart: Standard for analysis: colored bodies and wicks reveal who controlled the period. Ideal for reading momentum and patterns.
- Mountain (Area) Chart: A filled area under a line; beginner-friendly and presentation-friendly for quick direction checks.
How to choose quickly:
- Want trend clarity in 3 seconds? Line/Mountain.
- Want actionable signals and patterns? Candlesticks.
- Prefer minimalism with all OHLC data? Bars
Timeframes: Short, Medium, Long
Timeframe = how often your chart prints a new candle/bar. Pick the one that matches your focus window and nerves.
- Short-term (M1, M5, M15): Fast feedback, high noise. Great for day trading after you have strict rules and discipline.
- Medium-term (H1, H4, Daily): The sweet spot for most beginners, enough signals without getting whipsawed every minute.
- Long-term (Weekly, Monthly): Big-picture structure. Even if you trade intraday, these frames help anchor your bias and mark major levels.
Top-down process (consistency hack):
- Map trend and zones on Daily/Weekly.
- Refine on H4/H1.
- Execute on H1/M15 (or your chosen entry timeframe).
- Journal the whole thought process, future-you will thank you.
Spotting Trends (the market’s mood)
You don’t need to predict the future, just the current tendency.
- Uptrend: Higher highs + higher lows. Favor pullback buys.
- Downtrend: Lower highs + lower lows. Favor rally sells.
- Range: Sideways between support/resistance. Fade edges until a real break.
Support and Resistance (S/R): Your Map Grid
S/R are zones where price often pauses or reverses because supply/demand flips.
- Support: A floor where buyers typically step in.
- Resistance: A ceiling where sellers often appear.
How to mark them well:
- Start wide on H4/Daily/Weekly, obvious zones only.
- Refine the nearest actionable zones on your entry timeframe.
- Use round numbers, prior highs/lows, and consolidation edges.
- Think zones, not single laser lines. Markets are messy; give levels breathing room.
Bonus tip: If price slices through a level like butter and then stalls when retesting it from the other side, that level may have flipped roles (support ↔ resistance). That’s tradeable context.
Technical Indicators for Beginners (less is more)
Indicators should confirm what your eyes see, not replace them.
- EMA 20 & EMA 50: Smooth direction and reveal pullback zones. When EMA20 > EMA50 and price respects the 20, trend alignment is strong.
- RSI (14): Momentum and mean-reversion context. In trends, watch 40–60 mid-zone flips more than classic 30/70 extremes.
- MACD: Trend strength and rhythm. Crossovers near the zero line are more meaningful than random crossovers.
Common pitfalls:
- Indicator overload. If you need a legend to read your own chart, it’s too much.
- Ignoring price location. Indicators don’t override terrible locations (e.g., buying right under weekly resistance).
Candlesticks 101: Anatomy, Signals, Mistakes
A candlestick shows open, high, low, close for the period.
- Body: distance from open to close—the “who won” measure.
- Wicks: highs/lows—how far the tug-of-war went.
Core signals:
- Bullish candle: Close > open (often green). Stronger if it closes near the highs and pushes beyond a nearby level.
- Bearish candle: Close < open (often red). Stronger if it closes near the lows and breaks a nearby support.
- Doji: Open ≈ close indecision. Powerful only when sitting at a key level or after an extended move.
Deadly sins to avoid:
- Worshipping single candles out of context. A pin bar in the middle of nowhere is just a funny stick.
- Entering before the candle closes. Wait for confirmation, half-formed candles lie.
- Hiding stops inside obvious wicks. If you place stops where everyone else does, don’t be shocked when they get tapped.
5 Patterns Every Beginner Should Know
Learn a tight set you can practice and measure, then master execution.
1. Engulfing (bullish/bearish)
A large body engulfs the prior candle’s body → momentum shift. Works best at fresh S/R with trend confluence. Avoid chasing giant candles with tiny stops.
2. Pin Bar (hammer/shooting star)
Long wick rejects a level, close is back inside. Best when aligned with trend or after a stretched move into a level. Put your stop beyond the wick.
3. Inside Bar
Small candle within the prior candle’s range (the “mother bar”). Trade the break in the direction of context (trend/news/session). Avoid dead markets.
4. Double Top/Bottom
Two failed pushes at a level. Wait for a neckline break to confirm. Stronger after an extended run.
5. Break & Retest
Level breaks, price returns to test it from the other side, then continues. Cleaner in trending markets and around London/NY opens.
Putting It Together: The Chart-Reading Checklist
Before you click buy/sell:
- Use Candlestick for analysis; flip to Line to verify the overall slope.
- Pick H1/H4 to start (less noise), then refine entries on H1 or M15.
- Mark support/resistance from higher TF, refine locally.
- Add one indicator (EMA or RSI) for confirmation, no clutter.
- Define entry, stop, target in writing.
- Journal the trade idea (including why you didn’t take marginal setups).
Intraday Trading Example (with sizing math)
Instrument: EURUSD on M15 (hypothetical).
Setup: Break & Retest of intraday resistance.
Context
- EMA20 above EMA50 → bullish intraday bias.
- Price breaks 1.0900, pulls back to retest from above.
Execution
- Entry: Bullish rejection candle at 1.0902 after the retest.
- Stop: 8 pips below rejection low (1.0894).
- Target: +12 pips to 1.0914 (≈ 1.5R), or the next intraday swing.
Position size — digit by digit
- Account = $1,000
- Risk per trade = 1% = $10
- Stop distance = 8 pips
- Required pip value = $10 ÷ 8 = $1.25/pip
- On EURUSD, if 1.00 lot ≈ $10/pip, then 0.125 lots ≈ $1.25/pip.
This is how you translate a written risk rule into a real lot size, before you hit the button.
Swing Trading Example (higher-timeframe clarity)
Instrument: GBPUSD on H4 (hypothetical).
Setup: Trend pullback into prior resistance turned support.
Context
- Daily trend up; EMA20 above EMA50 on H4.
- Price rallies, then pulls back into the broken resistance zone aligned with the EMA20.
Execution
- Entry: Bullish engulfing candle forms at the zone.
- Stop: Below the swing low and below EMA50 buffer (e.g., 45 pips).
- Target: Prior weekly high and/or 2R measured from stop distance.
Position size (swing example)
- Account = $1,000; risk = 1% = $10; stop distance = 45 pips.
- Required pip value ≈ $10 ÷ 45 ≈ $0.22/pip.
- Size your lot so pip value ≈ $0.22/pip on GBPUSD. Your reward at 2R = $20 if TP hit.
Notes:
- Swaps may apply for multi-day holds. Log overnight financing in your journal.
- Wider stops demand smaller size. That’s how swing traders sleep at night.
Beginner KPIs: Measure What Matters
You can’t improve what you don’t track. Keep a weekly dashboard:
- Win Rate (WR): wins ÷ total trades. A low-40s WR can still be profitable if winners are bigger than losers.
- Average Reward-to-Risk (R:R): average win ÷ average loss. Aim for ≥ 1:2 where feasible.
- Expectancy (per trade):
E = (WR × Avg Win) − ((1 − WR) × Avg Loss)
Positive expectancy over 50–100 trades is more meaningful than a handful of screenshots. - Max Drawdown: largest peak-to-trough equity drop. Set a personal threshold to halt and review.
- Time-in-Trade: Are you exiting winners too early or babysitting losers?
- Journal Compliance: % of trades that followed your written plan. If this is low, fix behavior first.
Practice Safely with MultiBank (Demo → Live)
Reading charts is theory. Executing with discipline is the craft. Do it in this order:
- Open a MultiBank Demo Account and practice with virtual funds and live pricing.
- When consistent, compare Account Types and review Trading Conditions so costs and execution suit your style.
- Trade on MT4 or MT5; manage positions anywhere with the MultiBank App.
- Only then open a Live Account with small size and scale gradually.
FAQs
How do I read a forex candlestick?
Each candle shows open, high, low, close. A green (bullish) body means close > open; a red (bearish) body means close < open. Wicks show extremes. Read candles in context—trend direction and proximity to support/resistance.
Which chart type is best for beginners?
Use Candlesticks for analysis and signals. Flip to Line or Mountain to simplify the trend view. Bars are fine if you prefer minimalism, but candlesticks are the industry standard for pattern work.
What timeframe should I start with?
H1 or H4 balances clarity and signal frequency. Faster charts (M15/M5) can work once you’ve proven you can follow rules without rushing.
Do I need indicators to read charts?
No. Price + levels can be enough. Many beginners add EMA and RSI for clarity without clutter.
How many patterns should I learn first?
Five is plenty: Engulfing, Pin Bar, Inside Bar, Double Top/Bottom, Break & Retest. Master execution and risk control alongside recognition.
Where can I practice reading forex charts safely?
Use a MultiBank Demo Account to test ideas, then move to a Live Account with modest size once your stats are consistent.
