Technical analysts use a variety of price chart types to analyze the action of currency exchange rates. They typically use these charts to look for trends and other key chart patterns that will help them forecast upcoming exchange rate movements.
The data used to create these charts typically contains opening, closing, high and low prices for each time period.
Popular Chart Types
The most common types of charts used by technical analysts are bar charts, candlestick charts, line charts, tick charts and point and figure charts. Each of these chart types are described briefly in the sections below.
This type of chart consists of a series of vertical lines or bars that are drawn from the high for a particular period to the low for that period with ticks to the left and right indicating the open and close.
Figure 1: A daily bar chart for the EUR/USD currency pair. The vertical axis is the pair’s exchange rate and the horizontal axis is time.
This type of chart has a series of candles with bodies drawn from the open to the close and wicks drawn from the body to the high and low.
Line charts involve drawing a line between one period’s price to another’s, often close to close.
Figure 2: A close to close daily line chart for the EUR/USD currency pair. The vertical axis is the pair’s exchange rate and the horizontal axis is time.
This chart type plots a new tick or change in the price after a set number of trades without a set time component.
Point and Figure Charts
Point and figure charts focus exclusively on price with X’s indicating up moves of a certain size and O’s down moves. They also lack a set time component.