Financial Analyst/ Guest author, RADEX MARKETS
Lee W. is a seasoned professional trader with over 10 years of experience. Passionate about sharing valuable expertise and unique market insights, Lee W. now serves as an external and independent market analyst for RADEX MARKETS.
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A forex chart shows how the price of a currency pair changes over time. Learning how to read forex charts is one of the first core trading skills because a chart tells you where the price has been, what it is doing now and which way the market may be leaning.
Opening a trading platform for the first time can feel rather daunting. The screen is full of red and green candles jumping about, while experienced traders appear to recognise the trend at a glance. Meanwhile, you may still be wondering what the lines, numbers and timeframes actually mean. This guide is written for precisely that moment.
We will explain what a forex chart is and how to read candlestick, bar, line, Heikin-Ashi and mountain charts. You will also learn how to interpret common candle signals, read charts on MT4 and MT5, choose an appropriate timeframe and avoid the mistakes beginners make most often.
The aim is not to turn a chart into a crystal ball, sadly, trading platforms still lack that particular button, but I am working on it! It is to help you read price action clearly and make better-informed trading decisions.
Reading a forex chart means identifying the currency pair and axes, understanding each candle's open, high, low and close, and then judging the overall trend from left to right. The vertical axis shows price, the horizontal axis shows time, and the far-right edge represents the most recent market activity.
To start your trading journey, open up a trading account with Radex Markets, one of the industry's most trusted Forex brokers.
A forex chart is a graphical record of how a currency pair's price has changed over a selected period. The vertical axis displays the exchange rate, the horizontal axis represents time, and the far-right edge shows the latest available price.
For example, if GBP/USD is trading at 1.3250, it means one British pound buys 1.3250 US dollars. When the chart rises, the pound is generally strengthening against the dollar; when it falls, the pound is weakening against it.
Read more: What is a currency pair? Definition, types and examples for beginners
Forex charts can be displayed in several common formats, with each one presenting a different amount of price information. The next section explains how to read the five main chart types and choose the most suitable view.
The five main types of forex charts are:
Each chart presents price movement differently. Candlestick and bar charts show all four prices for each period, open, high, low and close, while line and mountain charts usually display closing prices only. Heikin-Ashi charts use averaged values to produce a smoother picture of the trend.
Chart type |
Data shown |
Best use |
|---|---|---|
| Candlestick | Open, high, low and close | Reading price action, momentum and candle signals |
| Bar (HLOC) | Open, high, low and close | Examining price structure without coloured candle bodies |
| Line | Closing price only | Identifying the broader direction with less visual noise |
| Heikin-Ashi | Averaged open, high, low and close values | Confirming trends and filtering out minor fluctuations |
| Mountain | Closing price with the area beneath the line shaded | Presenting a simple visual summary of price direction |
For most traders, the candlestick chart is the best place to start because it displays the full price range in an easy-to-read format. The following sections explain how each chart works, beginning with candlesticks in greater detail.
A candlestick chart shows four prices for every selected period: the open, high, low and close. If you are viewing a daily chart, each candle represents one trading day; on a one-hour chart, each candle represents one hour.
The candle's body covers the distance between its opening and closing prices. The thin lines above and below the body are called wicks, showing where the price travelled during the period before pulling back.
On 6 August 2026, GBP/USD opened at 1.3468, reached a high of 1.3480, fell to 1.3447 and closed at 1.3455. This produced a bearish body of 13 pips, an upper wick of 12 pips and a lower wick of 8 pips. The figures are based on WSJ historical GBP/USD prices.
Item |
Price |
Meaning |
|---|---|---|
| Open | 1.3468 | The day's starting price |
| High | 1.3480 | The highest price reached |
| Low | 1.3447 | The lowest price reached |
| Close | 1.3455 | The day's finishing price |
| Body (open to close) | 13 pips | Sellers pushed the close below the open |
| Upper wick | 12 pips | Buyers moved above the open, but could not hold the gain |
| Lower wick | 8 pips | Sellers pushed lower before some buying returned |
This candle tells a short story. Buyers initially pushed GBP/USD higher, but sellers took control and forced the price below its opening level. The lower wick shows that buyers responded near the day's low, although not strongly enough to recover the full decline.
Daily candle values can vary slightly between platforms because brokers use different server times and price feeds. The reading method, however, remains the same.
Once you can read one candle as a brief contest between buyers and sellers, a complete chart becomes a sequence of those stories. For this reason, the rest of this guide will use candlestick charts as its main format.
A bar chart carries exactly the same price information as a candlestick chart: the high, low, open and close. The difference is simply how those four prices are displayed.
Each vertical bar stretches from the period's lowest price to its highest. A small horizontal notch on the left marks the opening price, while a notch on the right marks the closing price.
If the right notch is above the left notch, the price closed higher than it opened. If it is below the left notch, the price closed lower.
Bar charts suit traders who prefer an uncluttered, largely uncoloured view and want to concentrate on price structure rather than candle bodies. They provide the same essential facts as candlesticks, although many beginners find them slightly less intuitive at first glance.
A line chart joins the closing price of each period to create one continuous line. It provides the cleanest view of market direction because it removes much of the short-term visual noise found on candlestick and bar charts.
The trade-off is that each period's open, high and low remain invisible. A line chart may show that GBP/USD closed higher during the day, for example, but it will not reveal how far the price rose or fell before reaching that close.
Line charts are useful when you want to step back and judge the longer-term direction without becoming distracted by every intraday fluctuation. However, candlestick charts are generally more suitable for detailed price analysis and trade timing.
Heikin-Ashi is an averaged variation of the traditional candlestick chart. Rather than displaying each period's exact opening and closing prices, its candles are calculated using data from the previous candle and average values from the current period.
This smoothing reduces some market noise and creates more consistent candle colouring during established trends. A sequence of similarly coloured candles with relatively small opposing wicks can therefore make trend continuation easier to recognise.
The price of that smoother view is reduced precision. Heikin-Ashi values are calculated rather than actual traded prices, so they should not be used to set exact entries, exits or stop-loss levels. This chart type is better used to confirm trend direction alongside a standard price chart.
Read more: What is a stop-loss order and how to set it
A mountain chart is a line chart with the area beneath the price line filled with colour or shading. It normally connects each period's closing price, so it carries the same basic information as a standard line chart.
This format makes the overall rise and fall of a currency pair easy to see, which is why mountain charts commonly appear in market presentations, news reports and simple performance summaries. However, the shaded area provides no additional analytical information.
It is useful to recognise what a mountain chart shows, but detailed forex analysis is better left to candlestick charts.
The shape of a single candle can provide a useful signal about the contest between buyers and sellers. These four candle shapes are among the most common, although their meaning depends on the trend and the price level at which they appear.
Signal |
Shape |
Possible implication |
|---|---|---|
| Long body, short wicks | A wide body with little wick above or below | Strong buying or selling pressure throughout the period |
| Long upper wick, small body | Price rose well above the body before retreating | Buyers were rejected and sellers regained control |
| Long lower wick, small body | Price fell well below the body before recovering | Sellers were rejected and buyers pushed back |
| Doji | The opening and closing prices are almost equal | Indecision, with neither side maintaining control |
A long bullish body with short wicks might appear after price breaks above resistance, showing that buyers controlled most of the period. A long bearish body below support suggests the opposite, with sellers applying consistent pressure.
A long upper wick with a small body can form when price tests resistance but fails to remain there. It shows rejection of higher prices, although the next candle should confirm whether sellers are genuinely taking control.
A long lower wick with a small body may appear when price drops into support and then recovers. This tells you that sellers drove the market lower, but buyers responded before the period closed.
A doji forms when the opening and closing prices are nearly identical. It reflects hesitation rather than an automatic reversal, particularly when it appears in the middle of an ordinary price range.
The location matters as much as the shape. A rejection candle at a well-established support or resistance level carries more meaning than the same candle floating in the middle of nowhere. Named multi-candle formations are a separate subject covered in the dedicated chart-pattern guide.
A clean chart is usually easier to read than one covered in indicators, labels and lines. Start with price, structure and the most important levels; additional tools can always be added when they serve a clear purpose. Personally, I like to trade with a clean and simple chart set-up; it makes life a lot easier and easier to focus on where to enter and exit a trade.
Read more: The best forex indicators every trader should use in 2026
Choosing the right forex timeframe is easier when you use two charts together: a larger timeframe to establish the trend and a smaller timeframe to time an entry or exit. A useful guideline is a ratio of roughly 1:4 to 1:6 between the trigger chart and the trend chart.
For example, if you use the four-hour chart to identify a possible entry, check the daily chart first to understand the broader direction. This helps prevent a small pullback from being mistaken for a complete market reversal.
Trading style |
Trend chart |
Trigger chart |
|---|---|---|
| Day trading | 1-hour chart | 15-minute chart |
| Swing trading | Daily chart | 4-hour chart |
| Position trading | Weekly chart | Daily chart |
A day trader might use the one-hour chart to identify the day's direction before moving to the 15-minute chart for a more precise entry. Looking only at a very small timeframe can make ordinary market noise appear far more important than it is.
A swing trader can use the daily chart to identify the main trend, support and resistance, then look for a suitable trigger on the four-hour chart. This combination provides useful detail without encouraging constant screen-watching.
A position trader may study the weekly chart for the long-term structure and use the daily chart to plan entries and risk levels. Short-lived intraday movements are generally less relevant to a position intended to remain open for weeks or months.
The larger chart provides context; the smaller chart provides timing. Using both gives each candle and signal a clearer place within the wider market structure.
Read more: Forex Technical Analysis: A Step-by-Step Beginner's Guide
I recently learned the importance of checking the larger timeframe through a losing GBP/USD trade. The 15-minute chart appeared to show a bullish reversal, so I bought at 1.2580 while the four-hour chart remained firmly bearish. The price briefly moved in my favour before the wider downtrend resumed and hit my stop at 1.2542.
That was a 38-pip loss. At £10 per pip, the trade cost me £380, and the larger chart had been warning me from the beginning. The problem was not that the small-timeframe signal was invisible; it was that I had read it without its proper context. It is an easy mistake to make. One thing in trading is that no matter how long you have been trading the market will always happily teach you a lesson.
Common chart-reading mistakes include:
Read more: 10 Forex risk management tips every trader should know
Chart reading is a foundation skill, not a crystal ball. Its purpose is to organise price information, identify stronger trading scenarios and help you manage uncertainty, not remove that uncertainty altogether.
Reading forex charts begins with identifying the currency pair, timeframe, price axis and time axis. Read each candle's open, high, low and close, then follow the chart from left to right to identify whether price is generally rising, falling or moving sideways.
Start with a single candle, then examine how it fits into the broader sequence of highs and lows. A bullish candle closes above its opening price, while a bearish candle closes below it, but either signal becomes more meaningful when viewed within the trend and near support or resistance.
Forex trading is primarily a skill, although luck can influence the result of any individual trade. Longer-term performance depends more heavily on analysing probabilities, controlling risk and following a consistent process than on correctly guessing every market move.
AI can scan charts, identify recurring patterns and organise large amounts of market data. However, interpreting the wider context, judging the reliability of a signal and accepting the financial risk of a decision remain the trader's responsibility.
Candlestick charts are the default choice for most forex traders because they display the open, high, low and close in an easy-to-read format. Line charts can be useful when you simply want a cleaner view of the longer-term direction.
No. Candles, trend structure, support and resistance can provide a complete basic reading of price action. Indicators are an optional supporting layer and should clarify what you see rather than cover the chart in colourful confusion.
Swing traders commonly use the daily chart to identify the main trend and the four-hour chart to time entries and exits. A two-hour chart may provide additional detail, but the daily chart should continue to supply the broader context.
Learning how to read forex charts begins with understanding one candle before attempting to interpret the entire market. Each candle records the open, high, low and close, giving you a short account of how buyers and sellers behaved during that period.
From there, read the chart from left to right and examine the structure of its highs and lows. Rising highs and lows usually indicate an uptrend, falling highs and lows suggest a downtrend, and an inconsistent structure may signal a ranging market.
Finally, place every candle signal within its proper timeframe and price level. A bullish candle on a 15-minute chart means far less if it forms directly beneath resistance or against a strong daily downtrend.
Chart reading cannot tell you with certainty what the market will do next. It helps you interpret existing price action and assess the probabilities more clearly. The next step is to open a real chart on a demo account, practise identifying its candles, trends and support and resistance levels, and build experience without risking real money.
Lee W. is a seasoned professional trader with over 10 years of experience. Passionate about sharing valuable expertise and unique market insights, Lee W. now serves as an external and independent market analyst for RADEX MARKETS.
Reviewed by RADEX MARKETS
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