Understanding Forex Trading – How to Read an Intraday Chart

What are intraday charts? Intraday charts are those charts that have a timeframe of less than a day or 24 hours. So, a 1 minute, 5 minute, 15 minute, 30 minute, 60 minute and 240 minute charts all are intraday charts. 240 minute chart is also known as the 4 Hour chart. Reading an intraday chart is the same for these different timeframes.

You can view these timeframes using a bar chart or a candlestick chart. A bar chart and a candlestick chart have some similarities and some differences. On a bar chart,the time period like the 1M, 5M, 30M, 60M or the 240M is represented with a bar. This bar will have a small horizontal bar to represent the open, high, low and close of that time period. There are some bar patterns that are considered to be very important and day traders love to trade them.

On the other hand, on the candlestick chart, time period like 1M, 5M, 15M, 30M, 60M and 240M are represented by a candle body that has the open and close. This candle body will have two wicks on the top and bottom of the candle body that will show you the high and low of that time period. If the closing price was higher than the opening price, we have a bullish candlestick and it is always given a light color like white or grey. And in case the closing price was lower than the opening price, we have a bearish candlestick that is always given a dark color like black. There are a number of candlestick patterns that when appear on these charts are considered to be important trend reversal and trend continuation patterns.

These intraday charts are used by short term traders or what are more popularly known as the day traders. 1M chart is very fast and there is a lot of noise on these charts due to the very short timeframe used. 5M charts are also a bit fast. Both these 1M and 5M charts are used by scalpers who need to quickly enter and exit the market grabbing a few pips each time. One of the most popular charts are the 4H charts that many day traders use to trade the Forex market. When you trade on these 4 hour charts, you don’t need to monitor them frequently as compared to the lower timeframe charts that need frequent monitoring. However, reading these intraday charts is almost the same. If you know how to read the 4H charts, you will also be able to read the lower timeframe charts like the 1M, 5M, 15M, 30M and the 60M!