What are the types of Forex charts?
A forex chart graphically depicts the historical behavior, across varying time frames, of the relative price movement between two currency pairs. A forex chart, essentially, allows a trader to view the past, which, according to technical analysts, can be a predictor of future price movement.
The most common types of forex charts are line, bar, and candlestick charts and the normal time frames that most platform’s charting software provides range from tick data to yearly data.
Types of Forex charts:
This chart is the simplest chart and doesn’t give much detail. A line chart is just a line drawn from one closing price to the next closing price. So, all traders see in a line chart is a series of closing prices.
Even though they are not popular, sometimes traders use these charts if they want to have a quick look at the least amount of data without all the cluttering information.
A bar chart reveals slightly more information than the line chart. When traders use this chart, they see both closing and opening prices in a bar chart. So, if they look at a 1-hour chart, each bar represents 1 hour. A bar in a 1-hour bar chart shows the price it opened within that hour and the closing price of that hour. In addition to that, it also shows the highest and the lowest prices of that hour.
In a one hour chart, the top of a bar shows the highest price of the hour and the bottom of the bar shows the lowest price. The little horizontal hash on the left side shows the opening price of the hour and the horizontal hash on the right side of the bar shows the closing price of the hour.
The candlestick chart is a variation of the bar chart. This chart shows the same price information as a bar chart but in a prettier, graphic format.
Many traders like this chart because it’s easier-to-read. Candlestick bars still indicate the high-to-low range with a vertical line. However, in candlestick charting, the larger block (or body) in the middle indicates the range between the opening and closing prices.
Candlesticks help visualize bullish or bearish sentiment by displaying “bodies” using different colors. Traditionally, if the block in the middle is filled or colored in, then the currency pair closed LOWER than it opened.