Charts in Technical Analysis
A chart displays how price changes over time.
X-axis (horizontal): time interval (from minutes to years).
Y-axis (vertical): price changes.
Charts provide a visual way to analyze price fluctuations.
Types of Charts
1. Tick Chart
Shows every single price change.
No standard time axis — movements are based on fixed price steps and irregular time intervals.
Active markets: many ticks.
Inactive markets: fewer ticks.
Best for analyzing market activity and tracking fast changes.
2. Bar Chart
Popular in Europe.
Displays 4 key prices for each interval:
Low: lowest price.
High: highest price.
Open: opening price (marked with a short line on the left).
Close: closing price (marked with a short line on the right).
Gap: a break between the opening price and the previous bar’s close.
Commonly used for daily intervals, sometimes weekly.
Downside: doesn’t show the uneven fluctuations within the period.
3. Line Chart
Displays only the closing price.
Connects closing prices with a smooth line.
Good for a quick overview or when there’s limited data.
Downside: lacks details about intraday price movements.
4. Candlestick Chart
The most popular and informative type.
Uses the same 4 prices as bars: Open, High, Low, Close.
Structure:
Body: range between opening and closing prices.
Green (or white): close > open.
Red (or black): close < open.
Shadows/Wicks: upper and lower price extremes for the period.
Advantage: very visual and easy to interpret.
Experienced traders identify candlestick patterns to forecast price movements.
Conclusion
Tick charts: for analyzing activity and small movements.
Bar charts: for structural analysis of 4 key prices (especially daily).
Line charts: for simple overviews.
Candlestick charts: the most visual and functional tool for technical analysis.