Chart Types
Line charts:
Line charts are the most common type of chart you will see in the financial news media. Line charts consist of a series of points, connected by line segments to graph price movements. These charts are a good way to get a general feel for the overall trend of the share price you are interested in.
Line charts unfortunately have some limitations regarding the amount of information they represent. Due to the fact that a line chart only represents one price point in a specific time period (typically the daily closing price), it does not totally convey the fluctuations in a share’s price over that specific period of time. This is significant because share price movements can have significant variation over a single time period, for example, the high and low for a specific time period could be very far apart, which wouldn’t be evident on a line chart of only the closing prices.
Below is a daily line chart of BHP Billiton (BHP):
Bar Charts:
If you want to see more complete price range information than a bar chart i
s what you need. Rather than only displaying price movement based on one price point, like the line chart, the bar chart gives you 4 different price points to reference; the opening price of the time period, the closing price of the time period, and the high and low price that occurred during that time period. This information is displayed on a vertical bar where the top and bottom of the bar indicate the high and low respectively, and a horizontal dash on the left of the bar indicates the opening price, while a horizontal dash on the right side of the bar indicates the closing price. Example of a singular price bar:
Most “Western” technical analysis price patterns are built around price bars, in addition there are also single, double, and 3 bar patterns that can be used as successful entry and exit signals. This is another big advantage that using bar charts has over line charts. Essentially bar charts convey everything a line chart does and much more.
Here is a daily bar chart of National Australia Bank (NAB):
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Candlestick Charts:
The final share chart we will be looking at is the candlestick chart. Candlestick charts originated in Japan and have been used for centuries. Candlestick charts show the same information as a bar chart but in a graphical format that is more fun to look at and includes some signals that are characteristic only of candlesticks.
Candlestick charts indicate the high and low of the given time period just as bar charts do, 
with a vertical line. The top vertical line is called the upper shadow while the bottom vertical line is called the lower shadow; you might also see the upper and lower shadows referred to as “wicks”. The main difference lies in how candlestick charts display the opening and closing price. The large rectangular block in the middle of the candlestick indicates the range between the opening and closing price. Traditionally this block is called the “real body”. Generally if the real body is black, or dark in color the stock closed lower than it opened, and if the real body is left white, or light in color, the currency closed higher than it opened. So if the real body is solid in color than the top of the real body indicates the open price and the bottom of the real body indicates the closing price. If the real body is unfilled or usually white, the top of the real body indicates the closing price and the bottom indicates the open price. See the illustration at left for clarity:
Below is a daily candlestick chart of QBE Insurance Group (QBE):
In our next technical analysis tutorial we will be covering share trend analysis.