I have another newbie question Im hoping you guys can help me with.Now by definition I understand the difference between a retracement and a reversal,but when I look at charts I get confused if what Im looking at is a reversal or just an intra day retracement.Also when intra-day retracements occur what time frame is best to view them on,I would assume the lower time frames such as 5min. 15min.,etc. would be best.Any help in regards to clearing up my confusion would be greatly appreciated,
A simple way to have an idea of whether you’re seeing a retrace or a reversal would be to check how far the retrace is moving. If it violates the trend pattern of, for instance, higher highs and higher lows (uptrend) or lower highs and lower lows for a downtrend, you should start considering the possibility that it’s not a retrace but in fact the beginning of a reversal or at least beginning of a ranging period.
The lower the time frame, the more frequently this rule will be broken without the trend actually reversing, more noise simply.
As for time frame, all time frames have their own trends really, so that’s hard to answer.
Hope I didn’t add to the confusion. 
Here are a couple of pictures to help you see this… Notice the highs (circled in black) are all lower than the previous high, and the lows (circled in red) are all lower than the previous low. This is the basic definition of a downtrend, and all these movements are retracements, not reversals.
Now look at this zoomed in chart of the end of the trend. This is when the price starts to reverse. You can see the three sure signs of a reversal, which I labeled in the picture…
Thanks for replying guys,let me see if you guys can clear up one more thing.Now in the pics that were posted Im assuming that is a daily chart.Are the retracements in the pics considered intra-day retracements or intra-week?
intra-day=retracements within a day
intra-week=retracements within a week
intra-month=retracements within a month
I a brand new NEWBIE. Can you explain why charts have colors like this one has green and red. What do they mean? I mean what does red indicate as against green?
You’re right, that is a daily chart so those would be considered intra-month, since the price waves are forming over the course of about 2 weeks.
It really doesn’t matter though. No matter what the timeframe you’ll still see the same patterns, although you will see more fake-outs on the lower timeframes.
On this particular chart red means price fell during the candle and green means it rose higher, but any color can be assigned to any candle.
I suggest you read the section of the Babypip’s school on candlesticks here… Forex Candlesticks: An Introduction to Japanese Candlestick Trading
It will help you to understand how to read candlesticks.
Thanks for the help Phil