Forex charts are an essential tool for traders who want to understand the market’s behavior and make informed trading decisions. Chart side by side is a popular way of displaying two different currency pairs simultaneously on a single chart. This type of charting allows forex traders to compare and analyze two different currency pairs to identify potential trading opportunities. In this article, we will discuss the basics of chart side by side and how to read them in forex.
What is Chart Side by Side?
Chart side by side is a charting method that allows traders to view two different currency pairs simultaneously on a single chart. This type of chart is useful when traders want to compare the performance of two currency pairs, identify correlations or divergences, and make trading decisions based on their analysis.
The chart side by side is created by dividing the chart into two sections or panels, with each panel displaying a different currency pair. The two currency pairs are plotted on the same time frame, which allows traders to compare their movements easily. The chart can display any combination of currency pairs, including major, minor, and exotic currency pairs.
How to Read Chart Side by Side in Forex?
Reading chart side by side in forex requires an understanding of the different components that make up the chart. Here are the essential elements of a chart side by side:
1. Time Frame: The time frame is the period covered by the chart. It can range from a few minutes to several years, depending on the trader’s preference. The most common time frames used in forex are 1 minute, 5 minutes, 15 minutes, 30 minutes, 1 hour, 4 hours, daily, weekly, and monthly.
2. Currency Pairs: The chart side by side displays two currency pairs on the same chart. Each currency pair has its own color, which makes it easy to identify which currency pair is being displayed in each panel. Traders can choose any combination of currency pairs to display on the chart.
3. Candlesticks: Candlesticks are the most common type of chart used in forex. They consist of a body and two wicks that represent the opening, closing, high, and low prices of a currency pair during a specific time frame. The color of the candlestick represents the price movement of the currency pair. A green candlestick indicates a bullish price movement, while a red candlestick represents a bearish price movement.
4. Indicators: Indicators are tools used to analyze the currency pair’s price movements and identify potential trading opportunities. Traders can add various technical indicators to the chart, such as moving averages, Bollinger bands, and relative strength index (RSI).
5. Chart Patterns: Chart patterns are specific formations that occur on the chart, indicating a potential trend reversal or continuation. Traders can use chart patterns to identify potential trading opportunities, such as head and shoulders, triangles, and double tops/bottoms.
How to Use Chart Side by Side in Forex Trading?
Chart side by side is a useful tool for forex traders who want to compare the performance of two different currency pairs and identify potential trading opportunities. Here are some tips on how to use chart side by side in forex trading:
1. Identify Correlations: Chart side by side allows traders to identify correlations between two currency pairs. If two currency pairs are positively correlated, they tend to move in the same direction. If they are negatively correlated, they move in opposite directions. Traders can use this information to make trading decisions based on the strength of the correlation.
2. Identify Divergences: Chart side by side also helps traders to identify divergences between two currency pairs. Divergence occurs when the two currency pairs move in opposite directions, indicating a potential trend reversal. Traders can use this information to enter or exit trades based on the strength of the divergence.
3. Analyze Price Movements: Chart side by side allows traders to analyze the price movements of two currency pairs simultaneously. Traders can compare the performance of the two currency pairs and identify potential trading opportunities based on their analysis.
4. Use Indicators and Chart Patterns: Traders can use technical indicators and chart patterns to identify potential trading opportunities on the chart side by side. They can add various indicators and chart patterns to the chart to identify potential entry and exit points.
Conclusion
Chart side by side is a useful tool for forex traders who want to compare the performance of two different currency pairs and identify potential trading opportunities. Traders can use chart side by side to analyze price movements, identify correlations and divergences, and use technical indicators and chart patterns to make informed trading decisions. By understanding how to read chart side by side in forex, traders can improve their trading strategies and increase their chances of success in the forex market.
