How to read a chart · EURUSD

How to read a EUR/USD chart

To read a EUR/USD chart, remember that the price is how many US dollars one euro buys, so a rising chart means the euro is strengthening against the dollar. Read each candle's close before its wicks, mark the prices where it has already reacted (prior session highs and lows, round numbers such as the whole and half figures), name the swing sequence, and note the session. EUR/USD is most active when London and New York overlap and around eurozone and US data releases.

What the price means

A currency pair is a ratio. EUR/USD at 1.0850 means one euro costs 1.0850 dollars. When the chart rises, the euro is gaining against the dollar — or the dollar is weakening against the euro, which is the same statement. Every move on this chart is about two economies at once, which is why both eurozone and US news can move it.

Pips, spread and the bid-drawn chart

Moves in EUR/USD are counted in pips — the fourth decimal place. Most charts are drawn from the bid price, while buying happens at the ask, so the spread is a real cost that the candles do not show. When you measure how far a stop is from entry, measure in pips and remember the spread sits inside that distance.

The trading day on EUR/USD

EUR/USD trades around the clock on weekdays, but its character changes by session. The Asian hours are usually narrow, the London open often sets the day's first meaningful range, and the London–New York overlap tends to be the most active part of the day. Read any pattern together with the hour it formed; a break at 3 a.m. London time and one at 2 p.m. are different evidence.

Where EUR/USD reacts

The most-watched prices are the previous day's high and low, the weekly open, and round numbers — the whole figure (for example 1.0800) and the half figure (1.0850). Because so many participants see the same prices, stops cluster just beyond them. Read a level as a band, wait for a close rather than a touch, and be aware that a quick spike beyond an obvious price can be a stop run rather than a breakout.

Structure in a slow-moving pair

EUR/USD often moves in measured swings and spends long stretches in ranges. Before using any trend language, name the sequence: higher highs and higher lows, lower highs and lower lows, or neither. If it is neither, the chart is a range, and a "breakout" is only a candidate until a candle closes outside it.

Headlines from two central banks

Scheduled releases from both sides move this pair: US inflation (CPI), US jobs (NFP) and Federal Reserve decisions on one side, eurozone inflation and European Central Bank decisions on the other. Around them spreads widen and slippage is common. A chart shows how price reacted in the past; it cannot show what a release will say.

Common mistakes reading EUR/USD charts

Forgetting that the chart is a ratio and reading it as "the euro" alone.
Measuring a stop without remembering the spread inside it.
Treating a wick through a round number as a confirmed break.
Using trend language on a chart that has been in a range for days.

Learn it properly

The modules behind this guide

Each one is a full lesson with Otus, a written answer and a quiz.

Vocabulary

Terms used on this page

Pair: One thing priced in terms of another — EURUSD is euros in dollars, XAUUSD is gold in dollars. A move in the pair can come from either side of it, and the candle does not say which.
Pip: The standard unit of price movement in currency pairs — usually the fourth decimal place (0.0001), or the second (0.01) for yen pairs. Indices and metals are more often measured in points or ticks.
Bid chart: A chart whose candles are built from bid prices — the usual retail default. The ask sits a spread above every bar and is not drawn, so a buy order can be a spread away from what the chart shows.
Spread: The gap between the bid (the price to sell at) and the ask (the price to buy at). It widens in thin conditions, and a wide spread can print extremes few people traded at.
London open: The first hour of the London session. Liquidity arrives in a rush, the overnight range is tested, and hourly bars often become several times larger than the ones before.
Overlap: The three hours, 13:00–16:00 UTC, when London and New York are both open. Counted as its own block rather than as part of either, because it behaves like neither — deeper, faster and more prone to sharp reversals.
Round number: A price ending in zeros, such as 2300. Orders sometimes cluster there, but a round number only becomes a level if the bars actually reacted at it.
Stop run: Price pushing briefly beyond an obvious level, triggering the stop orders resting there, and closing back on the original side. A touch, not a break. Also called a stop hunt.
Trading range: Sideways movement between a range high and a range low, with no sequence of higher or lower swings. Its edges are levels, judged by reactions like any other.
FOMC: Federal Open Market Committee: the Federal Reserve body that sets US interest rates, eight times a year. Decision at 2:00 p.m. New York time, press conference half an hour later.

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Education only. Nothing on this page is a recommendation to buy or sell EUR/USD or any other instrument, and no part of it predicts where price will go. Trading carries a high risk of loss.

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