Here are the most common forex charts:
The line chart is the original type of chart. In order to plot it, a line connects single prices for a selected time period. The most popular line chart is the daily chart. Although any point in the day can be plotted, most traders focus on the closing price, which they perceive as the most important. But an immediate problem with the daily line chart is the fact that it is impossible to see the price activity for the balance of the day.
The following line chart is updated every 10 seconds:
Line charts are considered for technical analysis because due to the sophistication of current charting services, daily price activity does not need to be lost.
Daily line charts are useful when looking for the big picture or the major trend because, without line charts, intraday activity would become an unimportant detail. When plotted over a long stretch of time, such as several years, a line chart is easier to visualize.
However, the line chart is a continuous chart and this is a disadvantage because price gaps cannot be charted.
Let's see the next one of the forex charts:
The bar chart is arguably the most popular type of chart currently in use. It consists of the following points:
- The high and the low prices (united by a vertical bar) - The opening price (marked with a little horizontal line to the left of the bar) - The closing price (marked with a little horizontal line to the right of the bar)
The following bar chart is updated every 10 seconds:
The opening price is not always important for analysis.
Bar charts have the obvious advantage of displaying the currency range for the period selected. The most popular period is daily, followed by weekly. Other periods may be selected as well. An advantage of this chart is that, unlike line charts, the bar chart is able to plot price gaps that are formed in the currency futures market. This type of chart is the one of choice among currency futures traders.
And the third one of the forex charts is:
The candlestick chart is closely related to the bar chart. It also consists of four major prices: high, low, open, and close. In addition to the common readings, the candlestick chart has a set of particular interpretations. It is also easier to view.
The following candlestick chart is updated every 10 seconds:
The opening and closing prices form the body (jittai) of the candlestick. To indicate that the opening was lower than the closing, the body of the bar is left blank. In its original form, the body was colored red. Current standard electronic displays allow you to keep it blank or select a color of your choice. If the currency closes below its opening, the body is filled. In its original form, the body was colored black, but the electronic displays allow you to keep it filled or to select a color of your choice.
The intraday (or weekly) direction on a candlestick chart can be traced by means of two "shadows": the upper shadow (uwakage) and the lower shadow (shitakage).
Just as with a bar chart, the candlestick chart is unable to trace every price movement during a day's activity.
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