Technical Analysis: Types of Charts

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.