Forex Chart Types

Welcome to Technical Analysis

Technical analysis is the study of price charts to judge where price may go next. Instead of asking why a currency moves (that is fundamental analysis), it asks how price has moved and what that suggests.

In this level you will learn to read candlesticks, find support and resistance, follow trends, spot chart patterns and use indicators like moving averages, RSI and MACD.

Skip to Candlesticks ❯

Before you can analyse a chart, you need to know how to read one. This lesson covers the main chart types (line, bar, candlestick, Heikin Ashi and Renko) and the timeframes you can view them on.

What is Technical Analysis?

Technical analysis rests on three simple ideas:

  1. Price reflects what traders know. News, expectations and fear all show up in the price.
  2. Prices move in trends. A move in one direction tends to continue more often than it suddenly stops.
  3. Behaviour repeats. Traders react in similar ways at similar levels, so patterns appear again and again.

Note: Technical analysis deals in probabilities, not certainties. No chart tells you the future. It helps you find trades where the odds and the risk:reward are in your favour, and it shows you where you are wrong (where to put a stop).

Line Charts

A line chart joins the closing prices of each period with a single line. It ignores the open, high and low.

A line chart of EUR/USD closing prices. The overall shape (up, then down) is very easy to see.

Good for

Seeing the big picture, trend direction and clean support and resistance levels without noise.

Limits

Hides how far price traveled inside each period. You cannot see the highs, lows or who won the battle.

Bar Charts (OHLC)

A bar chart shows four prices for each period. These are called OHLC:

Each bar is a vertical line from the low to the high. A small tick on the left marks the open. A small tick on the right marks the close.

Example: One hourly OHLC bar

EUR/USD, 14:00 – 15:00 UTC
Open:   1.0850   (left tick)
High:   1.0872   (top of the bar)
Low:    1.0841   (bottom of the bar)
Close:  1.0866   (right tick)

Range:  1.0872 − 1.0841 = 31 pips
Change: 1.0866 − 1.0850 = +16 pips (close above open = bullish bar)

Tip: Bar charts hold exactly the same information as candlestick charts. Candlesticks just make it easier to see at a glance, which is why most traders use them.

Candlestick Charts

A candlestick shows the same OHLC data as a bar, but draws a thick body between the open and close. Thin wicks (or shadows) show the high and low.

The same EUR/USD data as the line chart above, drawn as candlesticks. Now you can see the size of each move and every high and low.

Candlesticks came from Japanese rice traders in the 1700s and were introduced to Western traders by Steve Nison around 1990. Today they are the default on almost every platform. You will learn to read them in detail in the next lesson, Candlesticks.

Heikin Ashi

Heikin Ashi ("average bar" in Japanese) candles use averaged prices. This smooths out noise so trends are easier to see.

HA Close = (Open + High + Low + Close) ÷ 4
HA Open = (previous HA Open + previous HA Close) ÷ 2
HA High = max(High, HA Open, HA Close) HA Low = min(Low, HA Open, HA Close)
Regular candlesticks: the uptrend has a red candle every other bar, which can make it look choppy.
The same data as Heikin Ashi: an unbroken run of green candles in the uptrend, then red as the trend turns down.

Warning: Heikin Ashi prices are averages, not real prices. The HA close is not where the market actually closed. Never set entries, stops or targets from HA values. Check the real price first.

Renko Charts (Briefly)

A Renko chart ignores time completely. It draws a new "brick" only when price moves a fixed amount, for example 10 pips. If price moves less than that, nothing new is drawn. A reversal brick usually needs a move of two bricks against the trend.

The same move as 10-pip Renko bricks: four up bricks, then three down bricks. All the small swings are gone.

Note: Renko is useful for spotting clean trends and support/resistance. Because it hides time, you cannot see how fast price moved. MT4/MT5 need an add-on for Renko; cTrader and TradingView have it built in.

Timeframes

A timeframe is how much time each candle or bar covers. The same pair can look like an uptrend on one timeframe and a downtrend on another.

CodeOne candle =Candles per dayTypical user
M11 minute1,440Scalpers
M55 minutes288Scalpers
M1515 minutes96Day traders
M3030 minutes48Day traders
H11 hour24Day and swing traders
H44 hours6Swing traders
D11 day1Swing and position traders
W11 week—Position traders
MN1 month—Long-term investors, big-picture view

Example

An H4 candle covers 4 hours. A trading week of 5 days has 5 × 24 = 120 hours.

H4 candles per week = 120 ÷ 4 = 30 candles

Tip: Lower timeframes have more "noise" (random moves) and more false signals. Beginners usually do better starting on H1, H4 or D1. Learn how to combine timeframes in Multi-Timeframe Analysis.

Test Yourself With Exercises

Which price does a line chart use?

  1. The open
  2. The close
  3. The high
A line chart connects the closing prices of each period.

On an OHLC bar, what does the small tick on the right side show?

  1. The high
  2. The open
  3. The close
  4. The low
Left tick = open, right tick = close.

A candle has O 1.0850, H 1.0872, L 1.0841, C 1.0866. What is its range in pips?

  1. 31 pips
  2. 16 pips
  3. 22 pips
Range = high − low = 1.0872 − 1.0841 = 0.0031 = 31 pips.

Why should you not place a stop loss at a Heikin Ashi price?

  1. Heikin Ashi only works on the daily chart
  2. HA prices are averages, not real market prices
  3. Brokers ban it
Heikin Ashi values are calculated averages. The real market price can be different.

How many H1 candles are there in one 24-hour trading day?

  1. 6
  2. 96
  3. 24
Each H1 candle is one hour, so a 24-hour day has 24 candles.