CandleFocus Glossary Editor
OHLC Charts (also known as candlestick charts) are a way of visualizing financial market data. The OHLC (Open, High, Low, Close) stands for the opening price, the highest price, lowest price and the closing price of a specific asset during a period of time. OHLC is especially useful in Technical Analysis as it allows investors to gain an overall idea of the behaviour of a stock or the market in general, studying patterns and movements in the asset price over a certain time.
When looking at an OHLC chart the vertical line which represents the range between the high and low prices for that period, and the bar to the left illustrates the opening price, while the bar to the right shows the closing price. Usually the bar is green when the closing price is higher than the opening price and red when the closing price is lower than the opening price.
The OHLC chart represents the action of the price over a set period of time and displays the opening, closing, high and low point within the given period. It is important to know that each bar represents the trading period of one element in a chart (one day, week, month or 40 minutes, etc). Therefore the chart provides a clear visual representation of how the asset performed over each period.
As the chart displays the price action quite simply, investors can analyze the overall surge in the market or the significant trend in the asset without being too confused by the market details. OHLC charts are also used to make predictions and forecasts. Investors use the chart's price bars as a tool in forecasting future price moves by studying the past action of the price bars. In comparison to other chart types, OHLC can give the investor a clear indication of the relationship between the open, close, high and low prices during a certain time period.
To summarise, OHLC charts are a popular way to clearly represent assets and their price movements, allowing investors to make decisions based on the past and predict price movements based on the patterns they are able to identify in the data. OHLC charts help investors identify important trendlines, resistances, and breakthroughs with much simplicity.
When looking at an OHLC chart the vertical line which represents the range between the high and low prices for that period, and the bar to the left illustrates the opening price, while the bar to the right shows the closing price. Usually the bar is green when the closing price is higher than the opening price and red when the closing price is lower than the opening price.
The OHLC chart represents the action of the price over a set period of time and displays the opening, closing, high and low point within the given period. It is important to know that each bar represents the trading period of one element in a chart (one day, week, month or 40 minutes, etc). Therefore the chart provides a clear visual representation of how the asset performed over each period.
As the chart displays the price action quite simply, investors can analyze the overall surge in the market or the significant trend in the asset without being too confused by the market details. OHLC charts are also used to make predictions and forecasts. Investors use the chart's price bars as a tool in forecasting future price moves by studying the past action of the price bars. In comparison to other chart types, OHLC can give the investor a clear indication of the relationship between the open, close, high and low prices during a certain time period.
To summarise, OHLC charts are a popular way to clearly represent assets and their price movements, allowing investors to make decisions based on the past and predict price movements based on the patterns they are able to identify in the data. OHLC charts help investors identify important trendlines, resistances, and breakthroughs with much simplicity.