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Basic Types of Charts in Technical Analysis
16 August 2023
If you have read our article “Introduction to Technical Analysis”, then you must be aware of the significance of technical analysis, which is used by master traders to predict the ups and downs of the financial markets. In this article, we are going to lift the curtain on the myth of technical analysis: Charts!
- Line charts:
Let’s start with the most beginner-friendly chart: the line chart. Line charts display the closing prices of a currency pair, stock, crypto, or any other type of financial asset, over a specific time frame, and these price dots are connected with a line.
This straightforward chart gives a clear picture of price movements, convenient for you to take a quick glance at the market’s overall trend.
- Candlestick charts:
Candlestick charts are like little rectangles with wicks on top and bottom. These candles stand for price movements within a specific time period (maybe an hour or a day). The body of the candle indicates the opening and closing prices, while the wicks reveal the highest and lowest prices during that time. By taking advantage of candlestick charts, you can access more details about the magnitude of price movements.
- Bar charts:
Bar charts resemble vertical lines with small dashes on each side. The top dash represents the highest price, the bottom dash the lowest price, and the vertical line the opening and closing prices. Sounds like candlestick charts? That’s right. Bar charts are just like cousins of candlestick charts, providing similar information with just a slightly different look.
Summary
Charts help us unravel patterns, trends, and potential price movements. By analyzing these charts, you can make reasonable predictions about where prices might head next, giving you a competitive edge in CFD trading. Charts are your trusty companions to embark on the thrilling journey of trading.
Ultima Markets is a member of The Financial Commission, an international independent body responsible for resolving disputes in the Forex and CFD markets.
All clients of Ultima Markets are protected under insurance coverage provided by Willis Towers Watson (WTW), a global insurance brokerage established in 1828, with claims eligibility up to US$1,000,000 per account.
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RISK DISCLOSURE
Risk Warning: Trading Forex and CFDs carries the risk of losing substantially more than your initial investment and should only be traded with money you can afford to lose. You do not own or have any rights to the assets that underlying the derivatives (such as the right to receive dividend payments). Ensure you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please consider our legal documents and ensure that you fully understand the risks before you make any trading decisions.
General Advice Warning: The information on this website is a general nature only and any advice has been prepared without taking account of your objectives, financial situation or needs. Accordingly, before acting on the advice, you should consider the appropriateness of any advice having regard to your objectives, financial situation and needs, and after considering the legal documents.
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Ultima Markets, a trading name of Ultima Markets Ltd, is authorized and regulated by the Financial Services Commission "FSC" of Mauritius as an Investment Dealer (Full-Service Dealer, excluding Underwriting) (license No. GB 23201593). The registered office address: 2nd Floor, The Catalyst, 40 Silicon Avenue, Ebene Cybercity, 72201, Mauritius.
HuaPrime EU Ltd, registered number HE423188, and with a business address at Georgiou Griva Digeni 122A, Kallinicos Court, Shop 1—Upper level, Neapolis, 3101 Limassol, Cyprus, is regulated by the Cyprus Securities and Exchange Commission, which has CIF license number 426/23.
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