Risk warning: Trading is risky. Your capital is at risk. Exinity Limited is regulated by FSC (Mauritius).
Risk warning: Trading is risky. Your capital is at risk. Exinity Limited is regulated by FSC (Mauritius).

What is a Bar Chart? Technical Analysis

Forex Educational Video Series

Author: Andreas Thalassinos (BSc, MSc, MSTA, CFTe, MFTA), Head of Education at FXTM.

What is a Bar Chart?

There are three main chart types that traders use to read the markets specifically to determine the movement of price and identify trends. The first chart we are covering as part of FXTM’s “Technical Analysis Basics” video series, is Bar Chart. This is a western technique for price charting, comprised of a vertical line that represents the price range of a specific time period. The time period depends on your chart- the most popular periods are hourly, daily, weekly and monthly.

The highest point on the bar represents the high price of the financial asset in question, and the lowest point represents the low price. The distance between these two points is the price range. A “tick” to the left represents the opening price, and a “tick” to the right represents the closing price. The vertical line, together with the left and right ticks, is referred to as The Bar. Two consecutive bars represent specific relationships that technical traders recognise. These include:

  • Up Day – when the high of the second day is higher than the high of the first day and the low of the second day is higher than the low of the first day. It implies that there are more buyers than sellers.
  • Down Day – when the high of the second day is lower than the high of the first day and the low of the second day is lower than the low of the first day. It implies that there are more sellers than buyers.
  • Inside Day – when the high of the second day is lower than the high of the first day and the low of the second day is higher than the low of the first day. It implies that there is a pause, or that it’s a very quiet period, in the markets.
  • Outside Day – when the high of the second day is higher than the high of the first day and the low of the second day is lower than the low of the first day. This formation implies turmoil and volatility in the markets.

Next up is one of the most important and popular price charts, the Japanese Candlestick!

Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

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