3 Types of Forex Charts and How to Read them , When you start deciding to become a forex trader or stock it will indirectly be faced with a chart or graph to read the direction of price movements. And in general there are three types of chart or price movement charts that are very popular to use, namely:
- Line Chart
- Bar Chart
- Candlestick Chart
Ok, now let’s start discussing each type that you should know especially how to read it.
It is a very simple chart consisting of closing prices every time which is then connected to form a line. And if you look at it, you will know how prices move from time to time. Below is an example of the EURUSD line chart with time frame Monthly.
It is a more complex chart that can show the opening price, closing price, highest price, and the lowest price of forex price movements in a certain time frame (t1, t5, t15, t30, H1, H4, H8, D, W, M). Below is an example of a EURUSD bar chart with time frame Monthly.
The bottom point of the Bar is the lowest price, the top point of the Bar is the highest price, the height of the Bar is the price range, the sideways to the left is the opening price point, and the sideways to the right is the closing price point.
Opening price is the opening price in the time span
High price is the highest price in the span of time
Closing price is the closing price in the time span
Low price is the lowest price in the span of time
Bar chart weaknesses will sometimes confuse the trader when analyzing price movements and at a certain time will allow misuse and interpretation of data to determine whether it is in a bearish or bullish trend condition.
is a chart that is more interactive when compared to bar charts because it is better able to describe the condition of price movements more clearly so that a trader can easily determine the trend of price movements. And to form a candlestick is also needed data on the opening price (Opening price), highest price (High price), lowest price (Low price), and closing price (Closing price). Below is an example of EURUSD candlestick chart with time frame Monthly.
In the candlestick there is a body that is colored, for the white body means the price movement in the bullish trend and the black body means the price movement in a bearish trend as shown below.
For the actual body color you can set it yourself for example green to indicate the bullish and red conditions to indicate bearish conditions and to be safer we follow the default graphics provided by the trading platform so as not to confuse.
The advantage of using a candlestick chart compared to line charts and bar charts is that we can easily determine whether the price is bearish or bullish just by looking at it