Introduction
One of the most important skills every trader must master is
reading price charts and trends. Whether you’re trading forex,
cryptocurrencies, stocks, or synthetic indices on Deriv, charts provide
valuable insights into market movements. Learning how to interpret them will
help you identify opportunities, minimize risks, and make smarter trading
decisions.
In this guide, we’ll explain the basics of price charts, the
types of trends, and real-world examples you can apply right away.
What is a Price Chart?
A price chart is a graphical representation of how an
asset’s value changes over time. Traders use charts to spot patterns,
trends, and key levels to make informed trading decisions.
Common chart types:
- Line
Chart – Simple chart that connects closing prices.
- Bar
Chart – Shows open, high, low, and close prices (OHLC).
- Candlestick
Chart – The most popular among traders, showing detailed price action
with colored candles.
📌 Example:
If you’re analyzing Bitcoin on a candlestick chart, a green candle means
the price closed higher than it opened, while a red candle means it closed
lower. This gives quick insight into bullish (up) or bearish (down) moves.
Understanding Trends
A trend is the general direction the market is
moving. There are three main types of trends:
- Uptrend
(Bullish)
- Price
makes higher highs and higher lows.
- Example:
EUR/USD rising from 1.1000 → 1.1200 → 1.1500.
- Traders
look for buying opportunities.
- Downtrend
(Bearish)
- Price
makes lower highs and lower lows.
- Example:
Gold falling from $2000 → $1950 → $1900.
- Traders
look for selling opportunities.
- Sideways
(Range-Bound)
- Price
moves between support and resistance without clear direction.
- Example:
Volatility 75 Index fluctuating between 15,000 and 16,000.
- Traders
can use range-trading strategies here.
Key Chart Elements You Must Know
- Support
& Resistance: Areas where price repeatedly bounces or gets
rejected.
- Trendlines:
Lines drawn along highs or lows to identify the trend direction.
- Indicators:
Tools like RSI, MACD, and Bollinger Bands help confirm signals.
📌 Example with Deriv
Imagine you’re trading Deriv MT5:
- You
see a strong uptrend on the Volatility 100 Index.
- Each
pullback touches the trendline before bouncing higher.
- This
tells you the trend is strong, and you can look for buying opportunities
near the support.
Why Reading Charts Matters
- 📊
Helps you predict future price movements.
- ⏳
Improves timing of entries and exits.
- 🔒
Enhances risk management by placing stop-loss orders.
- 🚀
Increases chances of consistent profits.
Pro Tips for Beginners
✅ Start with candlestick charts
for better clarity.
✅
Always confirm trends with at least one indicator.
✅
Avoid trading against the major trend.
✅
Use a demo account on Deriv to practice before risking real money.
Final Thoughts
Understanding price charts and trends is the
foundation of successful trading. By learning how to identify uptrends,
downtrends, and sideways markets, you’ll be able to trade with confidence.
Combine this knowledge with proper risk management, and you’ll be one step
closer to becoming a profitable trader.
👉 Want to put this
knowledge into practice?
Sign up with my Deriv referral link and start trading today:
Open Your Free Deriv Account Here
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