Charts are the visual representation of price data. This summary view facilitates the interpretation of periodic price changes.

Charts are often an auxiliary forecasting tool and sometimes – especially for technical analysts – a primary one. The most popular are line, bar and candlestick charts. On the x-axis, the time indicators are marked – for example day 1, day 2, day 3. On the y-axis – the corresponding price values are shown.

Line Chart

EURUSD Daily Line Chart. Chart: MetaTrader4

EURUSD Daily Line Chart. Chart: MetaTrader4

The line chart, as the name suggests, draws a line between individual periods prices. The above chart shows a downward trend in EURUSD plotted over daily closing prices.

Bar Chart

Bar Chart. Chart: Trade Pretty

Bar Chart. Chart: Trade Pretty

Bar charts, on the other hand, carry a bit more detailed information. They depict high, low, opening and closing prices. A vertical bar extends from the lowest to the highest price. The nodes to the left and right represent the opening and closing prices respectively. This type of charts is more informative compared to line charts.

Candlestick Charts

Candlestick Chart. Chart: Trade Pretty

Candlestick Chart. Chart: Trade Pretty

Candlesticks are probably the most commonly used type of chart by technical analysts. Their popularity is due to the wealth of information they carry.

Like bar charts, candlesticks clearly distinguish between opening, closing, high and low price values. In addition, their body (the space between the opening and closing price) visually demonstrates price change direction – transparent when rising and in contrast to the background color when falling (there are other color variations). Tails – the extensions outside the body that mark highest and lowest prices, also carry useful information of an analytical nature.

Various methods and tools for chart analysis will be presented in the technical analysis section.

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