Forex Bar Charts

The Forex Bar Chart remains the most popular and widely used among traders. And it’s easy to understand why. Containing plenty of information about the price movement of the currency pair, the bar charts provide better visualization of the market movements, thus making them the primary choice of most traders.

A currency exchange bar chart is a graphic representation of the movement of prices using vertical bars. Connecting the highest price during a specified period to the lowest price, they give more detailed information as compared to the Line chart. The opening price of the market is displayed by a horizontal line on the left side of the chart and the closing price will be indicated by a horizontal line to the right side. The most popular time interval used for creating a forex trading bar chart is the hour. However, many traders prefer to use smaller time intervals that range from one minute to thirty minutes. It is common to use smaller time interval such as 30 minutes, 15 minutes, 5 minutes, 1 minute.

Standard currency bar charts are a common way to read the price activities. There are generally four different elements which combine to create a bar chart, the Open, High, Low and Close. The entire trading range for the chosen period can be observed by the total vertical height or length of bars on the chart. The top of the bar represents the highest price while the lowest bar represents the lowest price. When you see the word ‘bar’ going forward, be sure to understand what time frame it is referencing.

You will often see gaps in forex trading Bar charts. These gaps occur when the bar chart leaps, thus leaving a gap between the former price of the online currency and the next price. Sometimes, the economic indicators are the causes for such gaps, but often they occur spontaneously by themselves for no apparent reason.

If you look at an online Forex bar chart, you will notice that after the graph goes up and down for a few times, there is a horizontal line, which can be drawn at the lowest place in the graph to the highest place. This clearly shows that after the graph has dropped several times, it will not drop more than a specific place. This is known as the support level. After the graph rises a few times, it stops also at regular places, called resistance levels.

The currency exchange bar charts are the most popular charts used by traders today. Traders use its advantage of displaying the price range over the selected period as well as its capacity to plot price gaps. One of the drawbacks of Forex Bar Chart is its inability to plot the whole price fluctuation, even when plotted for extremely small periods of time.