A simple line chart draws a line from one closing price to the next closing price. When strung together with a line, we can see the general price movement of a currency pair over a period of time.

A bar chart is a little more complex. 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 for that time period, while the top of the bar indicates the highest price paid.

The horizontal hash on the left side of the bar is the opening price, and the right-side horizontal hash is the closing price. A bar is simply one segment of time, whether it is one day, one week, or one hour. The little horizontal line on the left is the opening price.

Chart Basics (Candlesticks)

The bottom of the vertical line defines the lowest price of the time period. However, in candlestick charting, the larger block or body in the middle indicates the range between the opening and closing prices.

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Traditionally, if the block in the middle is filled or colored in, then the currency pair closed lower than it opened. They just look so unappealing. We simply substituted green instead of white, and red instead of black.

This means that if the price closed higher than it opened, the candlestick would be green. For now, just remember that on forex charts, we use red and green candlesticks instead of black and white and we will be using these colors from now on.

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The purpose of candlestick charting is strictly to serve as a visual aid, since the exact same information appears on an OHLC bar chart. The advantages of candlestick charting are:.

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