Technical analysis studies financial markets by examining price movements and recurring trends. It uses price patterns, indicators, oscillators and trading systems to identify potential market opportunities. Common chart types include line, bar and Japanese candlestick charts, as well as Kagi, Renko and range charts. While technical analysis cannot predict markets precisely, it can help traders recognise recurring behaviour and potential signals.
The most frequently used charts include Line Charts, Candlestick Charts, and Bar Charts.
Line charts use "closing prices only" and are cleaner looking. Open, high, and low values are not plotted in line charts and this makes them more accurate as they do not have noise.
Bar charts depict OHLC (open-high-low-close) prices over a given period of time. The OHLC prices are represented by each bar, where the vertical line on each bar depicts the highest and lowest points of the prices, whereas the horizontal lines show the opening and closing prices. The bar charts show more price details compared to line charts.
The candlestick chart illustrates the OHLC price data of a particular period of time. In candlestick charts, one can easily find out if buyers or sellers were dominant in any period of time by observing the body and wicks that indicate the price range of that period.