Skip to main content

Bar Charts

Bar charts are made up of many price bars that each show how the price of a security or asset changed over a specific period of time. Bar charts are called different names depending on the values displayed. When the bar chart displays the high, low, and close prices it's called HLC bar chart. HLC charts are less commonly used. When the bar chart displays the open, high, low, and closing prices, it's called OHLC chart. OHLC bar chart is more popular and useful compared to HLC bar chart as it displays all four price values.



Understand Bar Charts
Each bar in a bar chart represents the price fluctuations over a specific time interval. Each bar's vertical line represents the range of prices seen within the time frame represented by the bar. A thin horizontal line to the left of the vertical line line indicates the opening price; a thin horizontal line to the right of the vertical line indicates the closing price.
The bar will be green (or white) if the closing price is higher than the opening price. When the closing is lower than the opening price, it indicates that the price fell during that time period and might be represented by a red (or black) bar. The bars are color-coded to aid traders in identifying patterns and price changes. All charting tools have a color coding feature.
Bar charts, along with other forms of charts including candlestick and line charts, are used by technical analysts to track price movement and inform trading decisions. Bar charts help investors examine trends, identify possible trend reversals, and track price volatility and fluctuations.
Traders and investors can pick and choose different time frame depending on the type of analysis they perform. Day traders pay close attention to the 1-minute bar chart, which updates its data by adding a new price bar every minute. Swing traders mainly use the daily chart, while position traders tend to perform their analysis by looking at the three-day chart. Investors, who  make a long-term investments, general use longer time frames such as weekly bar chart and occasionally the monthly bar chart.




Reading Bar Charts
Bar charts are useful for traders and investors since they provide the open, high, low, and closing prices for each time period.
The move between the high and low prices within the specific time frame is represented by the long vertical line of the bar chart. The longer the vertical line, the greater is the fluctuation between the low and the high of that period, indicating a certain level of volatility. On the other hand, when the vertical line is shorter it indicates that there was little volatility during that time frame.
A big spread between the day's start and close indicates a considerable price change. If the close is significantly higher than the open, it indicates that buyers, the bulls, were quite active throughout that time, which could be indicative of continued purchasing activity in following time periods. If price opens and closes near the same levels, it  indicates indecision, a possibly lack of conviction, during that time period.
Where price closes in relation to the open, the high and low of that time period provides important information.   A strong rally followed by a close considerably below the high indicates that sellers stepped in as the session came to an end. That's not as bullish as if the asset had closed around its high for specific time period.
The color of the bar is also important. A red (or black) bar displays a bearish-leaning pattern. A green (or white) bar displays a bullish-leaning pattern. 

Bar Charts vs. Candlestick Charts
Whether you prefer bar charts or candlestick charts, each has its advantages.
Comparing a bar chart to a Japanese candlestick chart reveals striking similarities. Both types of charts provide the same data, but do so in distinctive ways.
The high and and low is represented by the vertical line. The open and close are represented by two little horizontal lines on either side of the vertical line. Together (the vertical line, and the right and left horizontal lines) makes up a bar chart.



In comparison, candlestick charts, like bar charts, contain a thin vertical line representing the high and low of the time period (called shadows or wicks). 
The difference is that candlestick charts have an actual thicker body, which represents the difference between the opening and closing price within that time period. If the close is lower than the open, the color of the body is body red (or black); if the close is higher than the open, the color of the body is green (or white). 
While both charts display the same data, the information provided by candlestick charts and patterns can offer an added layer to the analysis.






Popular posts from this blog

What to Do When Market Is in the Toilet? Don't Trade OR Day Trade!

As we all know, 2022 has been a painful year, and it continues to be so. What works during a bearish market are a few strategies: shorts, inverse ETFs, holding cash positions and day trading. Today we take a look at ATXI and see how we day traded it. Watch this video to get the technicals. Good trading! Trading Risk Disclaimer All the information shared is provided for educational purposes only. Any trades placed upon reliance of SharperTrades, LLC are taken at your own risk for your own account. Past performance is no guarantee. While there is great potential for reward trading stocks, cryptos, commodities, options, forex and other trading securities, there is also substantial risk of loss. All trading operations involve high risks of losing your entire investment. You must therefore decide your own suitability to trade. Trading results can never be guaranteed. SharperTrades, LLC is not registered as an investment adviser with any federal or state regulatory agency. This is

Kal's Option Trade of the Week - UNG Short Call Vertical

This week we are going in with the Short Call Vertical strategy on UNG (Natural Gas ETF). The reason for choosing this option trade is that the Natural Gas market has been volatile and on a tear for the last few weeks. As contrarians, we will bet it slows down and turns around from here. Purely my assumption, but you can only trade on your own assumptions. :) Watch this video to get the trade details. Hope you enjoy it! Kal Trading Risk Disclaimer All the information shared is provided for educational purposes only. Any trades placed upon reliance of SharperTrades, LLC are taken at your own risk for your own account. Past performance is no guarantee. While there is great potential for reward trading stocks, cryptos, commodities, options, forex and other trading securities, there is also substantial risk of loss. All trading operations involve high risks of losing your entire investment. You must therefore decide your own suitability to trade. Trading results can neve

Bitcoin and Ethereum Funds: Two Unusual Activities That Could Result in a Big Move

Today we take a look at the technicals for Bitcoin and Ethereum. The crypto market has been quiet for several months.   On Friday we detected unusual dark pool activities (large block orders) in the Bitcoin Trust Fund and Ethereum Trust Fund, GBTC and ETHE respectively. When smart money know something, they place large orders in the dark pool exchanges, away from the public eye. By doing so, they are positioning themselves ahead of the crowds, in order to benefit from move that will follow, once the news or report is made public. However, dark pool activities   do not   tell us the direction of the next move. It only tell us that a large order(s) has been placed. Only a breakout (bullish) about a resistance level, or a breakdown (bearish) below a support level can confirm the direction of the next move. So, what can we expect next? Watch this video to find and to get the technical insights.  Good trading! Trading Risk Disclaimer All the information shared is provided for educational

10+ Stocks To Watch Moving Forward. Here Are the Technicals

Today we focus a several tickers including three swing trades that we initiated just a few days ago: ACCD, RBLX and TDOC. Create a watch list, watch this video to get the technicals, and manage your trades correctly. Featuring ACCD AGEN BBBY CHWY GROV LABU LCID LI MRNA MVIS PINS RAD RBLX RIVN SPCE TDOC Good trading! Trading Risk Disclaimer All the information shared is provided for educational purposes only. Any trades placed upon reliance of SharperTrades, LLC are taken at your own risk for your own account. Past performance is no guarantee. While there is great potential for reward trading stocks, cryptos, commodities, options, forex and other trading securities, there is also substantial risk of loss. All trading operations involve high risks of losing your entire investment. You must therefore decide your own suitability to trade. Trading results can never be guaranteed. SharperTrades, LLC is not registered as an investment adviser with any federal or state regulatory age