Charts for the technical analysis

Kinds of prices and time units.  Charts for the technical analysis are being constructed in
coordinates “price (the vertical axis) – time (the horizontal axis)”. The following kinds of currency
prices represented on charts are being distinguished on Forex:
• open – a price at the beginning of a trade period (year, month, day, week, hour,
minute or a certain amount of one from these units);
• close - a price at the end of a trade period;
• high – the highest from prices observed during a trade period;
• low – the lowest from prices observed during a trade period.
Providing the technical analysis one uses charts for different time units – from 1 year or more
till 1 minute. For instance, the computer program  RoyalForex allows to analyze price movements
charts for 1 day, 4 hours, 30 minutes, 15 minutes, 5 minutes and 1 minute. The bigger is a time unit
applied for the chart plotting the bigger is a time span to analyze price movements and to determine
the major trend by means of the chart. For the short trading charts for less time units are more
suitable.
Line chart. The line chart is plotted connecting single prices for a selected time period. The most
popular line chart is the daily chart. Although any point in the day can be plotted, most traders focus on the
closing price, which they perceive as the most important. (See Figure 4.6). But an immediate problem with
the daily line chart is the fact that it is impossible to see the price activity for the balance of the period as
well as gaps (See chapter 4.6) – breakups in prices at joints of trade periods. Nevertheless, line charts
are easier to visualize. Also, technical analysis goes well beyond chart formation; in order to execute
certain models and techniques, line charts are better suited than any of the other charts.
Bar chart.  The bar chart consists from separate  histograms  (See figure 4.7). To plot a
histogram in coordinates price – time the points responding to high, low, open and close prices for a
time period analyzed should be marked on the one vertical bar. The opening price usually is marked
with a little horizontal line to the left of the bar; and the closing price is marked with a little horizontal
line to the right of the bar.
Bar charts have the obvious advantage of displaying the currency range for the period selected.
An advantage of this chart is that, unlike line charts, the bar chart is able to plot price gaps. Hence, it is
impossible to see on a bar chart absolutely all price movements during the period.

 Example of a line chart of the Swiss franc.

Example of histograms plotted in the Swiss franc chart.

Candlestick chart. The candlestick chart is closely related to the bar chart. It also consists of four 

major prices: high, low, open, and close (See Figure 4.8). In addition to the common readings, the candlestick 

chart has a set of particular interpretations. The latter is possible thanks to the convenient visual observation 

of that chart.