Market Analysis
Reading price charts, key levels, and the indicators built on top of them.
Reading Candlestick Charts
A candlestick summarizes price action over a chosen period (a minute, an hour, a day) in one shape: the wide part ("body") spans the open and close price, and the thin lines above and below ("wicks" or "shadows") mark the high and low reached during that period.
A bullish candle (commonly shown in green) closes higher than it opened — buyers were in control over that period. A bearish candle (commonly shown in red) closes lower than it opened — sellers were in control.
Long wicks show rejection — price pushed to an extreme and was pulled back before the period closed — while a small body with long wicks on both sides (a "doji") often signals indecision between buyers and sellers.
A candlestick packs four numbers into one shape — and the wicks often tell you as much as the body does.
Each candle packs four numbers — open, high, low, close — into one shape; the body shows direction, the wicks show how far price reached beyond it.
Trends, Support & Resistance
A trend is the general direction price is moving over time — an uptrend prints a series of higher highs and higher lows, a downtrend prints lower highs and lower lows, and a range means price is bouncing sideways between two levels.
Support is a price level where buying pressure has repeatedly stepped in and pushed price back up; resistance is a level where selling pressure has repeatedly capped price and pushed it back down. Neither is a guarantee — once a support or resistance level is broken decisively, it often flips to play the opposite role afterward.
Traders watch these levels because they mark where the crowd's collective memory of past price action tends to concentrate buying or selling interest, not because the market obeys a fixed rule.
Support and resistance aren't rules the market obeys — they're just where the crowd's memory tends to concentrate.
Price tends to react at levels where it has reversed before — support underneath, resistance overhead — until one side finally breaks.
Popular Indicators: Moving Averages & RSI
A moving average (MA) smooths out price into a single line by averaging the last N periods, making the underlying trend easier to read through the day-to-day noise. A short-period MA reacts quickly to new price action; a long-period MA reacts slowly and represents the broader trend.
When a faster MA crosses above a slower one, it's often called a "golden cross" and read as a bullish signal; the reverse — fast crossing below slow — is a "death cross" and read as bearish. Crossovers lag the actual price move, since they're built from past data.
The Relative Strength Index (RSI) is a momentum oscillator scored 0–100 that measures how fast and how far price has recently moved. Readings above 70 are conventionally read as "overbought" (a strong up-move that may be due for a pause or pullback), and below 30 as "oversold" (the reverse) — these are conventions traders watch, not hard rules the market must obey.
Indicators are built from past price — which means every signal they give you is, by definition, a little late.
Moving averages reveal trend direction from the noise; RSI measures how stretched a recent move is, on a 0–100 scale.
Fundamental Analysis: What Moves Prices
While technical analysis studies price charts, fundamental analysis studies the underlying economic forces that move currency values — interest rates, inflation, employment, growth, trade balances, and political stability.
Central bank interest rate decisions are one of the single biggest forex drivers: higher rates tend to attract foreign capital seeking better returns, which tends to strengthen a currency, all else equal — and markets often move more on whether a decision surprised expectations than on the decision itself.
Scheduled economic releases — like Non-Farm Payrolls, CPI (inflation) data, GDP figures, and central bank meetings — routinely cause sharp, fast volatility around their release time, since they can shift the market's expectations for future interest rates in seconds.
- Interest rate differentials — where capital tends to flow toward the currency offering the better risk-adjusted return.
- Inflation data — persistently high inflation can pressure a central bank toward rate hikes, or erode a currency's value if the bank falls behind the curve.
- Employment and growth data — a strengthening economy generally supports its currency; a weakening one generally pressures it.
- Risk sentiment — in times of global uncertainty, capital often rotates toward currencies perceived as "safe havens" (like the US dollar, Japanese yen, or Swiss franc) regardless of that country's own individual data.
Markets often move more on whether news surprised expectations than on what the news actually said.
Check yourself: Market Analysis
What does the body of a candlestick represent?