Types of Price Charts
Types of Price Charts
Line chart
- Bar chart
- Candlestick chart
It’s simple to follow, but the line chart may not provide the trader with much detail about price behavior within the period.
But it does help the trader to see trends more easily and visually compare the closing price from one period to the next.
The line chart also shows trends the best, which is simply the slope of the line.
Bar charts help a trader see the price range of each period.
As the price fluctuations become increasingly volatile, the bars become larger. As the price fluctuations become quieter, the bars become smaller.
The price bar also records the period’s opening and closing prices with attached horizontal lines.
Bar charts are also called “OHLC” charts because they indicate the Open, the High, the Low, and the Close for that particular currency pair.
Here’s an example of a price bar :
High: The top of the vertical line defines the highest price of the time period
Close: The little horizontal line on the right is the closing price
Candlesticks Charts
Candlestick charts show the same price information as a bar chart but in a prettier, graphic format.
Candlestick bars still indicate the high-to-low range with a vertical line.
Candlesticks help visualize bullish or bearish sentiment by displaying “bodies” using different colors.
In the following example, the ‘filled color’ is black. For our ‘filled’ blocks, the top of the block is the opening price, and the bottom of the block is the closing price.
In our later lessons, you will see how using green and red candles will allow you to “see” things on the charts much faster, such as uptrend/downtrends and possible reversal points.
There are many different types of charts available, and one is not necessarily better than the other.
Each chart will have its own advantages and disadvantages. You can choose any type or use multiple types of charts for technical analysis. It all depends on your personal preference.
