Three types of foreign exchange chart analysis and viewing

Let’s take a look at the three most popular graphics:

  1. Line chart
  2. Bar chart
  3. Candle chart

Now, we will explain each type of graphics and let you know that you should understand what you should know about each type of graphics.

line chart

A simple line chart depicts the patterns connecting the closing prices of adjacent periods. When the closing price is connected with a broken line, we can see the movement of a currency pair in a certain period of time.

The following figure is an example of the trend of the line chart in Europe and America:

Bar graph

Bar charts are more complicated than line charts. It shows the opening and closing prices of the exchange rate, and also shows the highs and lows. The bottom of the vertical line shows the lowest point of the exchange rate during this period, while the top of the bar chart shows the highest point of the exchange rate during this period.

The vertical line itself also shows the fluctuation range of the exchange rate during this time.

The horizontal line on the left of the vertical line shows the opening price of the exchange rate, and the horizontal line on the right of the vertical line shows the closing price of the exchange rate.

The following figure is an example of a bar chart of EUR / USD:

Note: In our course, you will see that the “bar” refers to a single date in a graph.

A “bar” is a segment of time, or a day, a week, or an hour. When you see the word “bar” in the future, please be aware of the time period it represents.

The bar chart is also called the “OHLC” graph because it shows the opening price, high point, low point, and closing price of a particular currency.

The figure below is an example of a price “bar”:

Opening price: The short horizontal line on the left shows the opening price.

High point: The top of the vertical line shows the highest price for the period.

Low point: The bottom of the vertical line shows the lowest price for the period.

Closing price: The short horizontal line on the right shows the closing price.

Candle chart

The information displayed by the candle chart is the same as the bar chart, but it is more beautiful and more visual.

The candlestick chart is based on the opening price, highest price, lowest price, and closing price of each analysis period.

Taking the daily k line as an example, first determine the opening and closing prices, and the part between them is drawn as a rectangular entity. If the closing price is higher than the opening price, the k-line is called the Yang line and is represented by a hollow entity. On the contrary, it is called that the negative line is represented by a black entity or a white entity.

The figure below is an example of a candlestick chart for EUR / USD:

The advantages of candlestick charts are:

  1. Candle chart is easy to interpret and easier for beginners to analyze;
  2. Candle chart is convenient to use;
  3. The candlestick pattern has many very cool names, such as shooting star, which helps you remember the meaning of this pattern;
  4. The candle pattern is helpful to identify the market reversal point. Then you will learn more about candlestick patterns.