Look at the three most popular types of FOREX charts:
Line Charts
A simple curve line chart draws a line from one closing price to
the next closing price. When it strung together with a line, you 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 is a bit more complex. Here you can see the opening
and closing prices, as well as the highs
and lows. The bottom of the vertical bar indicates the lowest traded price for
that time period, while the top of the bar indicates the highest price paid.
The vertical bar refers the currency pair’s trading range as a whole.
The horizontal hash on the left side of the bar is the opening price, and the right-side horizontal hash is the closing price.
Here is an example of a bar chart for EUR/USD:
Bar charts are also called “OHLC” charts, because they indicate the Open, the High, the Low, and the Close for that certain currency.
Here is a price bar example bellow:
Low: The bottom of the vertical line refers the lowest price of the time period
Close: The little horizontal line on the right refers the closing price
Candlestick bars still refers the high-to-low range with a vertical line.
However, in candlestick charting, the larger block (or body) in the middle refers the range between the opening and closing prices. And if the block in the middle is filled or colored in, then the currency pair closed lower than it opened.
In the above example, the ‘filled color’ is black. For our ‘filled’ blocks, the top of the block is the opening price, and the bottom of the block is the closing price. If the closing price is higher than the opening price, then the block in the middle will be “white” or hollow or unfilled.
We simply replaced green instead of white, and red instead of black. This means that if the price closed higher than it opened, the candlestick would be green.
Whenever the price will closed lower than it opened, the candlestick would be red.
In the later lessons, you will be learned how using green and red candles will allow you to “see” things on the charts much faster, such as uptrend/downtrends and possible reversal points.
For now, just remember that red and green candlesticks are used instead of black and white on FOREX charts and you will see using these colors from now on.
Check out these candlesticks…forexmic.com style! Awe! yeeaaah! You know you like that!
Here is an example of a candlestick chart for EUR/USD. Isn’t it pretty?
By now, you know why candlesticks are so cool, it’s time to inform you that we will be using candlestick FOREX CHARTS for most, if not all of FOREX CHART examples on this site.
- Line
chart
- Bar
chart
- Candlestick
chart
Here is the well explanation of each of the FOREX charts bellow…
Line Charts
A simple curve line chart draws a line from one closing price to
the next closing price. When it strung together with a line, you 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 is a bit more complex. Here you can see the opening
and closing prices, as well as the highs
and lows. The bottom of the vertical bar indicates the lowest traded price for
that time period, while the top of the bar indicates the highest price paid.The vertical bar refers the currency pair’s trading range as a whole.
The horizontal hash on the left side of the bar is the opening price, and the right-side horizontal hash is the closing price.
Here is an example of a bar chart for EUR/USD:
Take note, throughout our lessons, you
will see the word “bar” in reference to a single piece of data on a chart.
A bar is simply one segment of time, whether it is one day, one
week, or one hour. If you see the word ‘bar’ going forward, be sure to know
what time frame it is referencing.Bar charts are also called “OHLC” charts, because they indicate the Open, the High, the Low, and the Close for that certain currency.
Here is a price bar example bellow:
Open: The
little horizontal line on the left refers the opening price
High: The top of the vertical line refers the
highest price of the time periodLow: The bottom of the vertical line refers the lowest price of the time period
Close: The little horizontal line on the right refers the closing price
Candlesticks Charts
The information provided is same to both in a Candlestick chart and in a bar chart, but in bar charts, it is in a prettier, graphic format.Candlestick bars still refers the high-to-low range with a vertical line.
However, in candlestick charting, the larger block (or body) in the middle refers the range between the opening and closing prices. And if the block in the middle is filled or colored in, then the currency pair closed lower than it opened.
In the above example, the ‘filled color’ is black. For our ‘filled’ blocks, the top of the block is the opening price, and the bottom of the block is the closing price. If the closing price is higher than the opening price, then the block in the middle will be “white” or hollow or unfilled.
Here at forex mic.com, we don’t like to use the
traditional black and white candlesticks. They just look so unappealing. And
since we spend so much time looking at charts, we feel it’s easier to look at a
chart that’s colored.
One must like a color television more
than a black and white television, so why not splash some color on those
candlestick charts?We simply replaced green instead of white, and red instead of black. This means that if the price closed higher than it opened, the candlestick would be green.
Whenever the price will closed lower than it opened, the candlestick would be red.
In the later lessons, you will be learned how using green and red candles will allow you to “see” things on the charts much faster, such as uptrend/downtrends and possible reversal points.
For now, just remember that red and green candlesticks are used instead of black and white on FOREX charts and you will see using these colors from now on.
Check out these candlesticks…forexmic.com style! Awe! yeeaaah! You know you like that!
Here is an example of a candlestick chart for EUR/USD. Isn’t it pretty?
The purpose of candlestick charting is strictly to serve as
a visual aid, since the exact same information appears on an OHLC bar chart. The
advantages of candlestick charting are:
- Candlesticks are easy to interpret, and are a good place for beginners to start figuring out forex chart analysis.
- Candlesticks are easy to use! Your eyes adapt almost immediately to the information in the bar notation. Plus, research shows that visuals help with studying, so it might help with trading as well!
- 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 market turning points – reversals from an uptrend to a downtrend or a downtrend to an uptrend. You will learn more about this later.
- It is easier to visualize more extend.
By now, you know why candlesticks are so cool, it’s time to inform you that we will be using candlestick FOREX CHARTS for most, if not all of FOREX CHART examples on this site.
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