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Bar chart graphic

A bar chart is a graphic representation of the actions of prices using a vertical bar to connect the highest price during a specified period to the lowest price. The markets opening price will be displayed by a horizontal line that is on the left side of the chart and the closing price will be indicated by a horizontal line to the right side. The most widely used time intervals for creating a bar chart is the hour. However, since real time prices are easy to obtain, some people prefer to use smaller time intervals that range from one minute to thirty minutes.

Technical analysis is the study of prices as they are reflected on the price charts. It assumes that the current prices are representing all of the information that is known about the market. But, prices don't only reflect proven facts; they are also affected by emotions, psychology and the current mood of participants. Prices are simply the result of supply and demand. Emotions can drastically effect prices at any given moment and markets are often moved up based upon expectations and not facts.

Standard bar charts are a common way for price activity to be displayed on a chart that can be easily read. There are usually four different elements that combine to create a bar chart, the Open, High, Low and Close for any specific trading session or a chosen time period. The user can represent any time frame on the chart from one minute to one month. The entire trading range for the chosen period is indicated by the total vertical height or length of bars on the chart.

The top of the bar is used to represent the highest price that occurred during the period of trading and the lowest bar represents the lowest price. A small dash placed at the left of the bar indicates the Open and a small dash to the right of the bar is used to indicate the Closed.

Standard Bar Chart Example:

bar chart

Each period, for example hour, looks as follows:

period on bar chart

To simply represent the activity on any given day, a daily bar chart is used. In this instance, a vertical bar is drawn from the peak of the highest price for the day to the lowest price. Ticks on the bar are used to represent the opening price and the closing price.

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