Bar Charts explained
Bar charts are a popular way of displaying data for traders. They can be used to display the price action on any stock, currency pair, or index. It is used to illustrate how prices have changed over a specific period, typically a day, week, or month.
The bars extend from the left side of the chart to the right and represent the opening and closing prices for each time interval. The height of each bar corresponds to the magnitude of price change during that interval. A short vertical line extending from the top or bottom of a bar indicates the high or low for that interval. Also, they typically have spaces in between them to indicate the passage of time. So, each bar on the chart has four different parts:
-The leftmost point is called the "open." This is the price at which the security first traded at that given moment (e.g. 1 minute, 1 hour, etc.).
-The rightmost point is called the "close." This is the price at which the security closed at that given moment (e.g. 1 minute, 1 hour, etc.).
-The top part of the bar is called the "high." This is the highest price that was reached during that particular time frame.
-The bottom part of the bar is called the "low." This is the lowest price that was reached during that particular time frame.
Similarly, like line charts, they can be used to identify trends, support and resistance levels, and other important information such as volatility. Bar charts indicate the volatility of stock by the size of the bars, with taller bars representing a greater price movement and smaller bars indicating little volatility.
By analyzing them, traders can get an idea of when a stock is trending up or down, and decide when to buy or sell. The key factor to watch is how that security has been performing relative to previous levels - whether it’s making higher highs and lows (uptrend), lower highs and lows (downtrend), or staying within a range. Look for patterns of bars that have formed over time, as these may give clues about future price movements.
Overall, bar charts can be helpful in showing the direction of long-term trends or short-term volatility.