If you are a regular trader you must be working with different types of chart style. In order to analyze technically, first of all, you need to set a suitable chart pattern. If you are a beginner in the trading platform, it is necessary to have enough knowledge regarding each and every chart pattern. Though all the patterns don’t have the same usefulness, investors can utilize them according to their demand. Each pattern has its own unique function and characteristics. Before going to the depth, it’s important to give an overview of these patterns separately.
Different Types of Chart Style
As I have stated above that there are different types of chart style but among them, few are widely used in technical analysis. In Zerodha Kite you can find best of the chart styles, such as Candle, Bar, Colored Bar, Line, Hollow Candle, Mountain, Baseline, Volume Candle. Let’s start with the candlestick chart pattern.
Candlestick Chart Pattern:
The pattern forms with different types of candlesticks. Each candlestick provides important information. It has a main body that indicates opening and closing price, use in two different colors to distinguish bearish candles from the bullish. Shadows indicate high and low price for a specific period of time. There are lots of candlesticks pattern, you can find full description regarding candlestick chart pattern in our site.
Before the introduction of the candlestick, bar chart was the most widely used chart pattern. It is a versatile and basic pattern. In this type, each bar represents a single unit in time, a min, an hour, a day etc. Each bar consists of three parts such as the central line, the left mark or tick, the right mark/tick. It also refers to as OHLC charts (open-high-low-close). In this type, some charting application uses color to indicate a bullish or bearish trend. To clarify the chart pattern in an easy way I am going to describe the three components of a bar.
- The central line- The top of the vertical line represents the highest price of a security and bottom indicates the lowest price trading.
- The left mark- The opening price is shown on the left side.’
- The right mark- Right side represents closing price.
As I have stated above that certain charting application uses color to indicate a bullish or bearish trend. A colored bar has almost the same characteristics as normal bar pattern. The only difference is the bar represents bearish and bullish trend by application of two different colors. You can identify the trend more easily by following the pattern.
Line Chart Style:
The line chart style is slightly different from bar and candlestick pattern. In the above two pattern, one can identify opening, closing, high and low price separately but in the line chart style, a series of data are connected together to form a line. Unlike the other pattern, it only represents closing price over a set period of time, doesn’t represent the visual information of the trading range. The advantage of the pattern is its simplicity, with a glance trader can get an overall view of the trend.
In normal candlestick when the candle is green or bullish, the close is higher than the previous close. A red candle defines bearish trend where the close is lower than the prior close. Though color is not a factor, you can change the colors according to your wish. Now come to the hollow candle, a candlestick is hollow (white) when the close is above the open, bullish trend and filled when the close is below the open, indicates a bearish trend.
This chart appears like a mountain. It is a similar line pattern that the area under the graph is shaded in color. It doesn’t serve any additional purpose for the technical analysis. Like line graph, it represents the closing price of a security. Mountain chart also refers to as area charts. The application of the style is useful for understanding fluctuation in prices more easily and prominent way. Financial newspapers also often use this specific pattern to their analytical report.
This is one of the most useful chart styles to read price fluctuation properly. You can change the baseline according to your demand. Just drag the baseline level according to you to get an accurate view of price movements. It appears like a line chart with a baseline. Due to the addition of the baseline, the chart becomes more prominent.
This candle is extremely useful in determining the strength of a trend. Increase volume defines sustaining of the trend. Just like normal candlestick chart it also has filled or unfilled body with tails along with volume. This specific combination helps to study candlestick patterns in combination with their volume. Short candlestick indicates uncertainty while high volume indicates increased interest of the traders to exit or enter the position of any security. The trend might reverse.
These are some of the widely used different types of chart style. By using these traders can analyze market movements and compare current price fluctuation with past data. Most primary objective before technical analysis is familiar with all the above chart to understand the market properly.
Ankita is a graduate in English language and she has also done her MBA from the Calcutta University. She has a high knack in the stock markets. An experienced stock market content writer Ankita is also trading on her own account. Ankita is also preparing for the NISM Research Analyst Series XV examination seriously.