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Beginner

Type of chart

Subtopic 2 – Types of Forex Charts

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)         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.

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

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

a) Candlestick charts show the same information as a bar chart, but in a prettier, graphic format.

b) If the block in the middle is filled or colored in, then the currency closed lower than it opened.

Here is an example of a candlestick chart for EUR/USD. Isn’t it pretty?

·         Candlesticks are easy to interpret, and are 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 uptrend. You will learn more about this later.