How to Read Forex Charts
Charts tell you everything: trend direction, entry points, and when to exit. Learn how to read candlesticks, identify support/resistance, and understand what AI PIPS charts are showing you.
📊 What Do Forex Charts Show?
A forex chart visualizes price movement over time.
- Candlesticks: Show open, high, low, close prices
- Green candle: Price went UP that period
- Red candle: Price went DOWN that period
- Timeframes: 1-minute to monthly views
- AI PIPS uses: 15-minute and 1-hour charts
Anatomy of a Candlestick
Candlesticks are the most popular chart type in forex. Each candle shows 4 data points:
🟢 Bullish Candle (Green)
The body (thick part) shows open → close. Green = closed higher than it opened (buyers won).
🔴 Bearish Candle (Red)
Red = closed lower than it opened (sellers won). Long bottom wick = buyers tried to push up but failed.
💡 What Wicks Mean
- •Long upper wick: Sellers rejected higher prices (bearish)
- •Long lower wick: Buyers rejected lower prices (bullish)
- •No wicks (full body): Strong directional move, one side dominated
Support and Resistance
The most important concept in technical analysis. Support and resistance are price levels where the market repeatedly reverses.
🛡️ Support
A price level where buying pressure is strong enough to stop the price from falling further.
Think of it as: A floor the price bounces off
Example: EUR/USD keeps bouncing at 1.0800
Strategy: Buy near support, target resistance
🚧 Resistance
A price level where selling pressure is strong enough to stop the price from rising further.
Think of it as: A ceiling the price can't break through
Example: GBP/USD keeps getting rejected at 1.2700
Strategy: Sell near resistance, target support
🔁 Role Reversal
When support breaks, it becomes resistance. When resistance breaks, it becomes support.
Example: EUR/USD had support at 1.0800. Price breaks below → now 1.0800 is resistance.
This is why "breakout" traders wait for confirmation before entering.
Trend Identification
"The trend is your friend." Markets move in trends 70% of the time. Identifying the trend is Step 1.
Uptrend
📈 Higher highs + higher lows
Buy dips (pullbacks to support)
GBP/USD: 1.2500 → 1.2600 → 1.2550 → 1.2700
Downtrend
📉 Lower highs + lower lows
Sell rallies (pullbacks to resistance)
EUR/USD: 1.1000 → 1.0900 → 1.0950 → 1.0800
Sideways (Range)
↔️ Price bouncing between support/resistance
Buy at support, sell at resistance
USD/JPY stuck between 148.00 - 149.50 for 2 weeks
How AI PIPS Uses Charts
Every AI PIPS signal includes a chart image showing our analysis. Here's what we mark:
Where to enter the trade (usually near support/resistance)
Exit if price goes against you (always below support for buys)
First target (close 50% of position here)
Second target (let remaining 50% run to here)
Show overall trend direction and key levels
Common Candlestick Patterns
These 3 patterns appear before major reversals. AI PIPS models detect them automatically.
Hammer
Bullish reversal
Small body, long lower wick
Sellers pushed down but buyers rejected. Bullish signal at support.
Shooting Star
Bearish reversal
Small body, long upper wick
Buyers pushed up but sellers rejected. Bearish signal at resistance.
Doji
Indecision
Tiny body, long wicks both sides
Market uncertain. Potential reversal if at key level. Wait for confirmation.
Get Chart Analysis with Every Signal
AI PIPS includes detailed chart images showing entry, stop loss, and take profit levels. No guesswork.
Join Free Group→Related Guides
Nightmare
Founder & Lead Trader
11+ years experience • FTMO Funded Trader