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Basics of Technical Analysis (1) BAR CHARTS
A bar is a vertical line on a price chart. The lowest point of the bar
is the lowest price recorded during a trading period and the highest point
of the bar is the highest price recorded during that same trading period.
A price chart is a two dimensional graph and consists of a horizontal scale
spanning from left to right at the bottom of the chart and which measures time.
This scale is commonly referred to as the time scale.
A bar chart consists as well of a vertical axis spanning from the top to the bottom of the chart
which measures price. This latter scale is commonly called the price scale
and is located to the right of a chart. These scales are also referred to
sometimes as the x and y axes where the x axis measures time and the y axis
measures price. A bar can consist of a mark resembling a hyphen (-). When this
mark is located on the left side of the bar (the high and low price range)
it represents the opening price. When that mark is located on the right
side of the bar it represents the price level where a financial instrument
closed.
When a bar consists of the open, high, low, and close it is referred to
as OHLC chart. When a bar does not consist of the opening price and only
the high, low, and close are shown, this type of chart is referred to as
HLC chart.
A bar chart is plotted for a specific time period for which the bar
measures the open, high, low, and close prices. There are several time bars. A
bar may represent trading activity for 15, 30 minutes, one hour, a day, a
week, a month etc. For example, a weekly bar is fully formed when the last
trading day of the week is over and reflects the daily price history in the
trading days of that week. A weekly bar chart seen on the first day of the
week, Monday, bears Friday's date whether there was trading activity during that date
or not.
The opening price of the weekly bar chart is the opening price
achieved on the first trading session of the week. The highest high price
attained during the week is the weekly high, the lowest low price is the weekly
low, and the closing price of the last trading session is the weekly closing
price.
A monthly bar chart is formed in a similar fashion as the weekly bar
chart and depends also on the daily OHLC price values. A monthly bar chart is
not formed based on the weekly bars although it does reflect the price
history of the trading weeks in the month. A monthly chart opening price is the
opening price of the first trading day of that specific month, the highest
daily high during the month is the monthly high, the lowest daily low is the
monthly low, and the daily closing price in the last trading day of the month
is the monthly close.
LINE CHARTS
Line charts, also commonly referred to as close-only charts. Line
charts are constructed by connecting a line through closing prices for a specific
trading period that is being analyzed; such as, hour, day, week, and
month.
HL LINE CHART
HL line charts are their drawn by connecting the highs and lows prices
for a specific trading session.
CANDLESTICK CHARTS
A price charting technique originally developed by Munehisa Homma, a
renowned and extremely successful Japanese rice trader who was an active trader
in 1700s. Drawing a candlestick requires the high and low for a time
period, like a bar chart. Drawing a candlestick depends also on how the close
and the open prices are related to one another. The thick part of the
candlestick is referred to as the real body and represents the price range between
the opening and closing prices. A real body that is not filled in, that is,
hollow, indicates that the closing price was higher than the opening price.
When the closing price is below the opening price, the real body of the
candlestick is filled in, that is, black. The thin lines extending from the body
are referred to as shadows and the highest point of the upper shadow
represents the high price in that specific time frame. The lowest point on the
lower shadow represents the low price for the period being studied. You can
also note that certain candlesticks figure have no shadow or thin lines
because the high price was the same as the close or the low price was equal to
the open price.
Again, we suggest you to trade with virtual money for as long as
possible, before trading your own funds. We will continue this practice of
sending educational e-mails in order to help you obtain further knowledge about
the foreign exchange market.
If you need more information, please reply to this e-mail and we will
provide you directions on where to get more education material.
Best Regards,
(source: Nadia Fleischer, Marketiva Corporation)
A bar is a vertical line on a price chart. The lowest point of the bar
is the lowest price recorded during a trading period and the highest point
of the bar is the highest price recorded during that same trading period.
A price chart is a two dimensional graph and consists of a horizontal scale
spanning from left to right at the bottom of the chart and which measures time.
This scale is commonly referred to as the time scale.
A bar chart consists as well of a vertical axis spanning from the top to the bottom of the chart
which measures price. This latter scale is commonly called the price scale
and is located to the right of a chart. These scales are also referred to
sometimes as the x and y axes where the x axis measures time and the y axis
measures price. A bar can consist of a mark resembling a hyphen (-). When this
mark is located on the left side of the bar (the high and low price range)
it represents the opening price. When that mark is located on the right
side of the bar it represents the price level where a financial instrument
closed.
When a bar consists of the open, high, low, and close it is referred to
as OHLC chart. When a bar does not consist of the opening price and only
the high, low, and close are shown, this type of chart is referred to as
HLC chart.
A bar chart is plotted for a specific time period for which the bar
measures the open, high, low, and close prices. There are several time bars. A
bar may represent trading activity for 15, 30 minutes, one hour, a day, a
week, a month etc. For example, a weekly bar is fully formed when the last
trading day of the week is over and reflects the daily price history in the
trading days of that week. A weekly bar chart seen on the first day of the
week, Monday, bears Friday's date whether there was trading activity during that date
or not.
The opening price of the weekly bar chart is the opening price
achieved on the first trading session of the week. The highest high price
attained during the week is the weekly high, the lowest low price is the weekly
low, and the closing price of the last trading session is the weekly closing
price.
A monthly bar chart is formed in a similar fashion as the weekly bar
chart and depends also on the daily OHLC price values. A monthly bar chart is
not formed based on the weekly bars although it does reflect the price
history of the trading weeks in the month. A monthly chart opening price is the
opening price of the first trading day of that specific month, the highest
daily high during the month is the monthly high, the lowest daily low is the
monthly low, and the daily closing price in the last trading day of the month
is the monthly close.
LINE CHARTS
Line charts, also commonly referred to as close-only charts. Line
charts are constructed by connecting a line through closing prices for a specific
trading period that is being analyzed; such as, hour, day, week, and
month.
HL LINE CHART
HL line charts are their drawn by connecting the highs and lows prices
for a specific trading session.
CANDLESTICK CHARTS
A price charting technique originally developed by Munehisa Homma, a
renowned and extremely successful Japanese rice trader who was an active trader
in 1700s. Drawing a candlestick requires the high and low for a time
period, like a bar chart. Drawing a candlestick depends also on how the close
and the open prices are related to one another. The thick part of the
candlestick is referred to as the real body and represents the price range between
the opening and closing prices. A real body that is not filled in, that is,
hollow, indicates that the closing price was higher than the opening price.
When the closing price is below the opening price, the real body of the
candlestick is filled in, that is, black. The thin lines extending from the body
are referred to as shadows and the highest point of the upper shadow
represents the high price in that specific time frame. The lowest point on the
lower shadow represents the low price for the period being studied. You can
also note that certain candlesticks figure have no shadow or thin lines
because the high price was the same as the close or the low price was equal to
the open price.
Again, we suggest you to trade with virtual money for as long as
possible, before trading your own funds. We will continue this practice of
sending educational e-mails in order to help you obtain further knowledge about
the foreign exchange market.
If you need more information, please reply to this e-mail and we will
provide you directions on where to get more education material.
Best Regards,
(source: Nadia Fleischer, Marketiva Corporation)