The following are the 3 most popular types of Forex charts:
- Line chart
- Bar chart
- Candlestick chart
In this chart, a line is connected by series of dots the represents the closing prices of the time frame or period you have chosen.
Unlike line chart which shows only the closing price, bar chart provides you the opening price and the closing price, as well as the highest and the lowest price of the trading range.
In each bar of this chart, you’ll see a vertical line and 2 horizontal lines. The vertical line represents the currency pair’s trading range, while the horizontal lines represent the opening and closing price. The upper tip of the vertical line is the highest price, while the bottom tip of the vertical line is the lowest price. The left horizontal line is the open price, while the right horizontal line is the closing price.
A bar chart is also known as “OHLC” chart as they show the open, high, low and close of a currency pair.
Similar to bar chart, candlestick chart also shows the open, close, high and low price. The only difference is the presence of a body. The body is the range between the opening price and the closing price, and is filled with a color.
The vertical line outside of the body is called the shadow.
When the closing price is above the opening price, the color of the body is similar to the background color of your chart, and vice versa.
Most traders prefer to use candlestick due to its appearance as it is easier to look at a chart.