Bar chart

A bar chart, also known as an OHLC chart, is a type of price chart that displays the opening, high, low and closing prices of each period. Each bar represents one period – for example one day, one hour or ten minutes, depending on the chart's timeframe. Its advantage over the line chart is that all the key price information for a period is contained in a single bar.

How to read a bar chart

Each bar consists of a vertical line and two short horizontal ticks:

• The top of the vertical line marks the highest price of the period (high).
• The bottom marks the lowest price (low).
• The tick on the left shows the opening price (open).
• The tick on the right shows the closing price (close).

The abbreviation OHLC stands for exactly these four values: open, high, low and close. If the right tick is higher than the left one, the price rose during the period; if it is lower, the price fell. Many platforms also show rising and falling bars in different colours.

Example: a share opens the trading day at $50, climbs to $53, drops to $49 at one point and closes at $52. The daily bar therefore runs from $49 to $53, with the left tick at $50 and the right tick at $52 – a rising day with a fairly wide trading range.

Why bar charts matter for traders

Because each bar shows the opening price and the full range of the period, bar charts also reveal gaps – price jumps between two periods that carry meaning for many traders. The length of a bar shows how volatile a period was, and the position of the close within the bar hints at whether buyers or sellers were in control at the end of the period. Many patterns used in technical analysis, such as reversal bars, are based on exactly this information. A bar chart contains the same data as a candlestick chart, and which of the two a trader prefers is largely a matter of personal taste.