Let’s take a look at the three most popular types of charts:
1. Line chart
2. Bar chart
3. Candlestick chart
Line Charts
A simple line chart draws a line from one closing price to the next closing price. When strung together with a line, we can see the general price movement of a currency pair over a period of time. Here is an example of a line chart for EUR/USD:
Bar Charts
A bar chart also shows closing prices, while simultaneously showing opening prices, as well as the highs and lows. The bottom of the vertical bar indicates the lowest traded price for that time period,while the top of the bar indicates the highest price paid. So, the vertical bar indicates the currency pair’s trading range as a whole. The horizontal hash on the left side of the bar is the opening price, and the right-side horizontal hash is the closing price.Bar charts are also called “OHLC” charts, because they indicate the Open, the High, the Low, and the Close for that particular currency. Here’s an example of a price bar:
Open:The little horizontal line on the left is the opening price
High:The top of the vertical line defines the highest price of the time period
Low:The bottom of the vertical line defines the lowest price of the time period
Close:The little horizontal line on the right is the closing price
Candlestick Charts
Candlestick charts show the same information as a bar chart, but in a prettier graphic format. Candlestick bars still indicate the high-to-low range with a vertical line. However, in candlestick charting, the larger block in the middle indicates the range between the opening and closing prices. Traditionally, if the block in the middle is filled or colored in, then the currency closed lower than it opened. In the example below, 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. If the closing price is higher than the opening price, then the block in the middle will be “white” or hollow or unfilled.
The purpose of candlestick charting is strictly to serve as a visual aid, since the exact same information appears on an OHLC bar chart. The advantages of candlestick charting are:
1. Line chart
2. Bar chart
3. Candlestick chart
Line Charts
A simple line chart draws a line from one closing price to the next closing price. When strung together with a line, we can see the general price movement of a currency pair over a period of time. Here is an example of a line chart for EUR/USD:
Bar Charts
A bar chart also shows closing prices, while simultaneously showing opening prices, as well as the highs and lows. The bottom of the vertical bar indicates the lowest traded price for that time period,while the top of the bar indicates the highest price paid. So, the vertical bar indicates the currency pair’s trading range as a whole. The horizontal hash on the left side of the bar is the opening price, and the right-side horizontal hash is the closing price.Bar charts are also called “OHLC” charts, because they indicate the Open, the High, the Low, and the Close for that particular currency. Here’s an example of a price bar:
Open:The little horizontal line on the left is the opening price
High:The top of the vertical line defines the highest price of the time period
Low:The bottom of the vertical line defines the lowest price of the time period
Close:The little horizontal line on the right is the closing price
Candlestick Charts
Candlestick charts show the same information as a bar chart, but in a prettier graphic format. Candlestick bars still indicate the high-to-low range with a vertical line. However, in candlestick charting, the larger block in the middle indicates the range between the opening and closing prices. Traditionally, if the block in the middle is filled or colored in, then the currency closed lower than it opened. In the example below, 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. If the closing price is higher than the opening price, then the block in the middle will be “white” or hollow or unfilled.
The purpose of candlestick charting is strictly to serve as a visual aid, since the exact same information appears on an OHLC bar chart. The advantages of candlestick charting are:
- Candlesticks are easy to interpret and it's a good place for a beginner to start figuring out chart analysis
- Candlesticks are easy to use. Your eyes adapt almost immediately to the information in the bar notation.
- Candlesticks and candlestick patterns have cool names such as the shooting star, which helps you to remember what the pattern means.
- Candlesticks are good at identifying marketing turning points – reversals from an uptrend to a downtrend or a downtrend to an up-trend. You will learn more about this later.
Now that you know why candlesticks are so cool, it’s time to let you know that we will be using
candlestick charts for most, if not all of chart examples on this site.
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for his very usefull article
candlestick charts for most, if not all of chart examples on this site.
learn to trade forex
please donate to babypips.com
for his very usefull article
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