Bar, candlesticks or line charts ?

This lesson is for those uninitiated to technical analysis.

Candles

The Bar , Candlesticks and Line charts are the most commonly used charts. The bar and Candle charts show the entire action that has happened during the period which it represents, as it shows the open, high, low and close of the day. The Line chart shows only the closing price but is very reliable as the closing price shows the consensus reached by the market players .

With good charting softwares available, it is very easy to change to a bar chart, candle chart or line chart at the click of your mouse. I use the Bar chart when I have to draw trendlines as it is easier to connect the highs and lows, than when drawn on a candle chart. Once the trendlines are drawn, I revert to the candle charts.

I prefer to view the charts in the candlestick form as they are more helpful in analysing.The Candles depict the entire action during time frame that the candle represents, at a single glance The distance between the open and close is called the real body of the candle. When the open is higher than the close then the real body is black. When the open is lower than the close, then the candle is white. Thus when the real body is black, we can instantly know that it has been a down day and a white candle depicts an upday.

Candle charts also have patterns of their own . I will discuss these patterns sometime later.