In technical analysis there are many ways to display a price chart like in the form of a line, an area, bars and even some unconventional ways like point and figure, heikin ashi, renko and so on. The most popular and used ones though are the line chart, the bars chart and the candlesticks chart. Let’s see them below.
- The line chart connects all the closing prices in a given timeframe. So, for example, if previous days’ closing prices were 1.2000, 1.2050, 1.2100 and so on you will see a rising line connecting those prices over the past 3 days and the same would be seen for an hourly or a 5 minute chart.
- The bars chart displays the open, the high, the low and the closing price over a given timeframe. For example, in this daily chart, each bar represents what happened in a day, so you have its open price represented by a left little segment, the high and low it reached in that day and the closing price represented by a right little segment connecting the next bar. In this particular chart example, orange bars are those with the closing price higher than the open price, and the grey bars have the closing price lower than the open price. You can choose any colour you like.
- The candlesticks chart is the most popular one. It displays the same data as the bars chart, so the open, the high, the low and the closing price over a given timeframe, but in a much easier visual way. The body of the candle indicate the open and the closing price, so if the candle is orange it means that the closing 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 in that particular timeframe.
This article was written by Giuseppe Dellamotta.