In technical analysis, there are many ways to display a price chart like as line, area, bars and even unconventional ways like dot and figure, heikin ashi, renko, etc. The most popular and widely used are the line chart, the bar chart and the candlestick chart. Let’s see them below.
- The line chart connects all closing prices within a given time frame. So, for example, if the previous days’ closing prices were 1.2000, 1.2050, 1.2100 and so on, you would see a rising line connecting those prices over the past 3 days and the same would be observed for an hourly or 5-minute chart.
- The bar chart displays the open, high, low and close price over a given period. For example, in this daily chart, each bar represents what happened in one day, so you have its opening price represented by a small left segment, the high and the low it reached on that day- there and the closing price represented by a small line segment connecting the next bar. In this particular chart example, the orange bars are those with the close price higher than the open price, and the gray bars have the close price lower than the open price. You can choose any color you like.
- The candlestick chart is the most popular. It displays the same data as the bar chart, so the open, high, low and close price over a given period, but in a much simpler visual way. The body of the candle indicates the open and close price, so if the candle is orange it means the close price is higher than the open price and vice versa if the candle is grey. The wicks (also called shadows) represent the high and low price reached during that particular time period.
This article was written by Giuseppe Dellamotta.