Candlesticks and line charts

The most commonly used method to show price movements in a price chart is by using "candlesticks". As the name implies, it's formed a "candlestick" which shows the price movement over a single time period for the current time frame.

So if you are in the 15-minute chart/frame, a "candlestick" will be the price movement over a 15 minute period, while in a time frame of 1 day, a "candlestick" will be the price movement the instrument has had over an entire trading day.

The way a "candlestick" is designed

The highest point on a "candlestick" is the highest price the instrument has been traded in the current time frame. Conversely, the lowest point is the lowest price the instrument has been traded for in the current time frame.

The "body", ie the thicker part of a "candlestick", indicates the opening price and the closing price for the relevant time frame.

If the "candlestick" has a blue/green "body", it means that the closing price of the instrument in the current time frame was higher than the opening price. A red "body" thus has a lower closing price on the instrument than the opening price. You can have different colors on these, but in most charts, it will be blue/green and red/black. See the example below:

Candlestick pattern chart


Technical analysis using "candlesticks" is often better than using a standard line graph, as you get more visual impressions and patterns by looking at a "candlestick" chart.

There are a large number of ways to analyze the further price development of an instrument using different types of "candlestick patterns". The most used and well-known patterns, as well as more information on how to use them, can be found here.

A typical "candlestick" chart might look like this:

candlestick osbex.PNG


Above you see the price movements in a "candlestick" graph (chart) for the Oslo Stock Exchange (OSEBX) index with a one-day time frame.

Use of line charts

Line charts are the most commonly used and "standard" layout for most brokers and the like. With a line chart, you get a simple chart showing a price movement based on a given time frame, such as weekly or daily. This layout is not used specifically for technical analysis, but rather as an overview of how the price movement has been for a specific instrument over a time period. Se an example below:


Sølv linjekart linechart silver


Here you see a typical line chart of the instrument silver/USD. At the top left, you see the current price, as well as a change in the percentage price movement in relation to the current opening price. As you can see, this is a 5-day time frame for the chart showing 5-minute movements. You thus get a simple and straightforward overview of how the instrument has been traded the last 5 days.

sølv linjekart - år silver usd chart


Above you see the same line chart of the instrument silver/USD. The difference with the previous image is that here we see the instrument's price movements daily over 1 year period.

As you can see, both types of price graphs can have their pros and cons. In any case, it is good to know the difference, and how these are read and interpreted based on what strategy you have as an investor. As mentioned above, "candlesticks" are the most commonly used method of technical analysis, while standard line charts are usually used to provide an overview of the price movement of an instrument.

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