Here are three most popular Types of charts that exist in the FX market:
- Line chart: chronologically represents the change of currency pair exchange rates by connecting closing prices with the straight line.
Bar Chart: it shows the opening and closing prices as well as the highs and lows. The bottom of the vertical bar indicates the lowest traded price while the top of the bar indicates the highest price paid during that specific time. The vertical bar indicates 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.
- Candlestick Chart: closer to bars, but presents values as candlesticks having wicks at both sides. The candlestick remains “solid” when the opening rate exceeds the closing one and it turns “hollow” when the opening rate is lower than the closing.
Candlestick charts possess three major advantages:
- They are more visually immediate than standard bar charts.
- Candlesticks are either filled in or transparent, you no longer have to waste time figuring out what actions the prices took during the time period.
- Candlestick charts allow you to quickly spot trends in market prices by simply observing the color and you can easily see what the stock did during a given time.