You’ve taken the first steps. You’ve opened trades and seen how the market moves. Now let’s get serious. Do you know what is happening on the chart? What is a chart, by the way?
You will use various methods to forecast price movements. The common element is that you look at the chart to make a prediction. We will show you how to understand charts and choose the best option.
Types of charts
You started off by using a line chart to check the price. If not, here’s what one looks like:
A line chart is, essentially, a line showing how the price moved in the past. It shows only the key price changes. This type of chart is more manageable for beginner traders.
In the example above, you can easily tell the price is moving up and then starts to move down.
The problem with lines is their simplicity. Each point on the line chart tells us where the price has been in the past. But that alone is not enough. Next, let’s learn what a time frame is.
A time frame shows how a price changes over a set period. On a line chart, it connects the closing prices for each period, like 1 hour or 1 day, giving you a simple view of the trend.
The example below marks each closing price, showing the price movement over 10 hours.
You can see way more on a candle chart like the one below.
Each candlestick shows how prices moved during a period:
The body shows the opening and closing prices.
The upper shadow shows the highest price reached.
The lower shadow shows the lowest price.
The candle is green if the prices rose during the period. In that case, the price started from the Open price (the lower part of the candle) and ended at the Close price. A green candlestick is called bullish.
The candle is red if the prices fell during the period. In that case, the price started from the Open price (the upper part of the candle) and ended at the Close price. A red candlestick is named bearish.
Let’s open a daily time frame in the FBS app. One candlestick shows a one-day change in the price, so five candles show the EURUSD behavior from Monday to Friday.
Now, go to the 5-minute chart. On this chart, one candlestick demonstrates a change in the price within 5 minutes, and the whole screenshot shows only a couple of hours.
A candlestick shows how the price moved in a set time period: the body shows where it opened and closed, and the wicks show the highest and lowest points. Green means the price went up, and red means it went down.
You will see many candlestick charts online. Sometimes, you’ll see black and white candlesticks, at other times — green and red ones.
Don’t worry, the colors of the candles don't matter. In FBS, we use green for bullish candlesticks and red for bearish ones by default, but there is an option to customize the colors as you wish.
Predicting the price
Ready to predict your first price movement? This is where real trading happens. Imagine knowing where the market will go, before it happens. We’ll use technical analysis and fundamental analysis to get ahead of the game.
Technical analysis
The main advantage of technical analysis is that it’s simple to understand but can be an extremely powerful tool if used correctly. Take a look at the chart below.
It seems simple enough when you already know how candles work. The price rises in the left part of the chart and falls in the right. How do we predict that turning point before it happens? We use technical indicators.
A technical indicator is a tool that helps traders analyze price movements and decide when to buy or sell. It works automatically and tells you more than can be seen on a clear chart. One of the most popular indicators is the RSI.
The relative strength index (RSI) tells us when the price is too high or too low, giving us a clue about what may happen next. In this case, the RSI went too high, signaling that it’s time for the price to go down a bit.
Let’s try using the RSI. Add the RSI indicator in the FBS app.
See how the price moves when the RSI gets too high or too low? If it’s high, the price will likely drop soon. If it’s low, the price might rise. Try spotting these moments on your chart.
Fundamental analysis
Want to know what else is driving prices? Big events—a change in government policy, a financial report from a major company, or global news—can cause prices to swing wildly. Fundamental analysis is about spotting these key events.
Banks, governments, and companies constantly exchange money across borders. They send the goods to another country and get foreign currency. The more they send, the more currency must be exchanged back to the country’s domestic one.
Large banks carry out cross-border transactions.
Governments need to buy foreign currencies to pay their debts and make reserves.
Large companies make payments for mergers and acquisitions from one country to another.
Suppose you see the news headline, ‘Interest rates rise.’
Higher interest rates mean deposit rates.
Banks attract more deposits.
The currency supply decreases.
With less supply, the currency’s value often goes up.
This could be a signal to consider a buy position, expecting the currency to strengthen.
For example, the whole trading community watches the United States CPI release (it’s a measure of price growth). When the CPI is too high, the US Central Bank increases interest rates, reducing the amount of USD on the market.
As a result, when the CPI is too high, the USD usually rises.
The figure below shows October 10, 2024, when the US CPI turned out to be above expectations (too high). The USD immediately rose, and the EURUSD went down.
When the USD rises, it becomes stronger compared to other currencies. In the EURUSD pair, a stronger USD means it takes fewer dollars to buy 1 euro, causing the EURUSD rate to fall.
When the USD goes up, EURUSD goes down.
Note, this is an extremely simplified example of fundamental analysis. We dive deeper into it in our advanced materials, which you’ll find useful after this course. Also, you can read our analytics in the Telegram channel to stay tuned for all important events.
What instruments are there?
Every FBS trader can open positions on a variety of CFDs, all available on one platform. Here's a quick breakdown:
Instrument | Description | Examples | Key Tip |
Currency Pairs | Trade on a change of currency prices. You don’t buy the actual currency, you trade the pair in the form of CFD. | EURUSD, GBPJPY, EURGBP | Pairs without USD or EUR offer bigger spreads but higher volatility—avoid these if you’re just starting. |
Commodities | CFD on raw materials that are traded. Popular ones include precious metals, oil, and natural gas. | Gold (XAUUSD), Brent Oil, Natural Gas | Commodities can be volatile. Use technical analysis to time your trades. |
Stocks | Companies divide ownership into shares, which you can trade as CFDs. Company performance and market sentiment influence the stock price. | Amazon, Tesla, Apple | Stock trading is ideal for following long-term market trends. |
Indices | CFD on groups of stocks that represent a section of the market. Often used as a gauge for overall market performance. | S&P 500 (US500), Nasdaq (US100), Dow Jones (US30) | Use them to hedge against individual stock movements or when the stock market is closed. |
Homework
This one is harder because you need to learn in order to succeed.
Open the FBS app and add the Bollinger Bands (BB) indicator to a 5-minute chart.
See that it consists not of a single line like the RSI, but of several lines. The price tends to bounce between the upper and lower lines, giving you clues about future price movements.
Open a buy trade when the price touches the lower band.
Watch what happens over the next 20-30 minutes. You’ve just used technical analysis to predict a price movement—how does it feel to make your own call?
In the next lesson, we’ll build on this to develop even more advanced strategies.
