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Top 3 Technical Analysis Charts for Trading


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, Reviewed by James Stanley on November 24, 2021

Technical Analysis Charts: Talking Points

The purpose of technical analysis of charts is to identify patterns and market trends By using a variety of technical chart types and other chart functions. Interpreting charts can be intimidating for novice traders, so understanding basic technical analysis is necessary. This article reveals the popular types of technical analysis charts used in forex trading, outlining the foundations and uses of these chart types.

How many types of charts are there?

There are three main types of technical analysis charts: Candle, bar and line charts. They are all created using the same price data but display the data in different ways. As a result, they incorporate a variety of technical analysis to help traders make informed decisions in the forex, stock, index and commodity markets. While there are many different types of charts, this article is only covering the top three as these three are the most widely followed.

The three charts presented below have been chosen because they are universal across most trading platforms.

Top 3 types of technical analysis charts for trading

line chart

Line charts used for technical analysis

  • Best for Trading: Stocks
  • Trading Experience: Beginners
  • Technical Analysis Techniques: Overall Market Overview That Eliminates Transferring Data
  • Advantages: Supports trading without the influence of emotions

A line chart usually displays closing prices and nothing else. Each closing price is linked to the previous closing price to form a continuous line that is easy to follow.

This type of chart is often used for television, newspapers and many web articles because it is simple and easy to digest. It provides less information than candlestick or bar charts but is better for a simple market view at a glance.

Another advantage of a line chart is that it can help managing business sentiments By choosing a neutral color, as shown in the blue chart above. This is because the line chart ends up being ‘choppy’ movements in different colors as seen in bar and candlestick charts.

Expert Tip: Because of a line chart showing only closing prices, more experienced traders will consider a line chart to map daily closing prices or for situations when analysts want to observe sub-waves without noise.

Bar (HLOC) chart

Bar (HLOC) chart

  • Best for Trading: Forex, Stocks, Indices and Commodities
  • Trading Experience: Intermediate
  • Technical Analysis Techniques: Use Price Data (HLOC) identify trends, support/resistance and entry point
  • Benefit: Provides the trader with more detail which helps to identify key levels and deeper data

A bar chart displays the high, low, open and closing (HLOC) prices for each period specified for the bar. The vertical line is formed by the high and low price for the bar. The dash to the left of the bar was the opening price and the dash to the right indicates the closing price.

Being able to identify whether a bar is closed (green) or down (red), indicates to the trader the market sentiment (bullish/bearish) for that period.

Similarities between this chart type and candlestick charts are visible when viewed side by side, but for a clean market view a bar chart is better. By removing the bolded color from the chart, traders can view market trends with a simpler approach.

candlestick chart

candlestick chart

  • Best for Trading: Forex, Stocks, Indices and Commodities
  • Trading Experience: Intermediate
  • Technical Analysis Technique: Equivalent to Bar Chart Technique (depending on trader preference)
  • Advantages: Because of the full nature of candlesticks, unlike bar charts, candlesticks are easier on the eyes for traders.

A candlestick chart displays the high, low, open and closing (HLOC) prices for each period specified for the candle. The “Body” of each candlestick represents the opening and closing prices while the candle “Wicks” represents the high and low prices for each period.

The color of each candle depends on the settings applied, but most charting packages will use green and red as the default colors. The green candles indicate the price from where it opened (often called a bullish candle), and each red candle means the price from where it opened (often called a bearish candle). closes less than

Candlestick charts are by far the most popular type of chart used in forex technical analysis because it provides much information while remaining easy to see at a glance.

Discover Top 10 Candlestick Patterns do business with

How to analyze technical charts

Charting techniques in technical analysis will vary depending on the strategy and the market being traded. It is important to be familiar and comfortable with a strategy in order to accurately implement that strategy. Will be allowed to analyze charts based on strategy continuity in business,

FAQs before choosing a technical analysis chart type:

  1. what is trading strategy being adopted?
  2. Is the trading strategy targeting short, medium or long term trades?

Once the above questions can be answered, the chart type can be selected using the relevant information provided.

Explore the Foundations of Multiple time frame analysis,

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