Types of Forex charts

Types of Forex charts
This time we will study the three types of charts that are most used in Forex:

• Line graphs


• Bar Graphs


• Japanese candle charts

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1. Line Graph

The line chart draws a line from the closing price to the next closing price. When these prices are linked with a line we can see the general movement of a currency in a period of time.

Here is an example of a EUR / USD line chart:



 

 

2. Bar chart

A bar chart also shows closing prices, while at the same time showing opening prices as well as highs and lows.

The horizontal bar marks on the left side the opening price, and on the right side the closing price.

Here is an example of a EUR / USD bar chart:

 

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Note: As you progress through our course you will see a lot of the word "bar" to refer to a specific section of the chart.

The bar is simply a segment of time, be it 1 day, a week or an hour.

Bar charts are also referred to as "OHLC" by Open, High, Low, Close, ie the opening price, the highest, the lowest, and the closing of a Currency pair

 

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Opening Price: The small horizontal line on the left is the opening price.

Maximum: The top of the vertical line defines the highest price in that time period.

Minimum: The bottom vertical line defines the lowest price in that time period.

Closing Price: The small horizontal line to the right is the closing price.

3. Japanese Candlestick Chart

Among the different types of Forex charts, Japanese candles are widely used.
The candle charts show the same information as the bar charts but in a more visual and eye-catching format.

Candle charts indicate the price range from the highest point to the lowest point with a vertical line. However, in a candle chart, the large middle block (sail body) indicates the range between opening and closing prices. Traditionally, if the body is stuffed or colored, the currency closed at a lower price with which it opened.

In the following example the body is in black color. The top of our candle bodies in color indicates the opening price and the bottom, the closing price. If the closing price is greater than the opening price, the candle body in that case would be white or empty. (Depending on the configuration of the trading platform you can also find for example green bodies for bulls and red candles for bearings, ...)

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Here's a chart of Japanese candles on the MetaTrader 4 platform.

 



 

The purpose of candle charts is to provide a visual aid as it contains the same information as a bar chart. The advantages of the Japanese candle chart are:

• Easy to interpret, ideal for beginners who start their chart analysis


• Easy to use


• Easy to remember


• Good to identify key points where prices can be returned.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.