Bar Chart

What is a 'Bar Chart'

A bar chart is a style of chart used by some technical analysts on which the top of the vertical line indicates the highest price a security is traded at during the day, and the bottom represents the lowest price. The closing price is displayed on the right side of the bar, and the opening price is shown on the left side of the bar.

Bar Chart

BREAKING DOWN 'Bar Chart'

A single bar represents one day of trading. These are the most popular type of charts used in technical analysis. The visual representation of price activity over a given period of time is used to spot trends and patterns. Bar charts are very similar to Japanese candlestick charts with the exception of the bodies not being filled on bar charts. They are often considered the Western version of candlesticks and are best used to observe the contraction and expansion of price ranges during trends.

Bar Charts vs. Candlestick Charts

While the two styles of charts give the exact same information, there is a big split between which style is preferred by technical analysts. Bar charts are designed to be very simplistic. They allow an easy view of the range of price movement as it places more focus on the highs and lows over the open and close. Bar charts are considered more logical, literal and less emotional.

Candlesticks fill in a body based on the open and closing price of the candle for the specified time interval. By coloring in the body red or green, it can be a distraction to many traders. The focus is on the body with less attention on the highs and lows. Candlesticks tend to emphasize the emotional element of price action. For example, a bearish engulfing candlestick indicates strong panic selling due to the initial higher open that turns into a red close beyond the low of the prior candle. This indicates the buyers from the previous candle are trapped with losses, which triggers panic selling. The large red body indicates the emotion of fear, thus short selling. However, the very next candle could actually squeeze the short sellers higher since the bearish engulfing pattern did not form at the peak of an uptrend. The various candlestick patterns such as hammers, stars, doji and engulfing patterns have a high rate of failure when the context of the formation is not taken into consideration. Reversal triggers require a confirmed trend to first be in place.

Bar chart traders would not have gotten sucked into the shorts because the range would need to be confirmed with the next several bar chart closes, with a focus on the price range expansion to the downside for confirmation. Bars can also be colored red and green to indicate if the price closed higher or lower than the prior bar.

RELATED TERMS
  1. Bar

    A graphical representation of a stock's movement that usually ...
  2. Outside Reversal

    A price chart pattern in which a security's high and low prices ...
  3. Evening Star

    A bearish candlestick pattern consisting of three candles that ...
  4. Morning Star

    A bullish candlestick pattern that consists of three candles ...
  5. Bar Graph

    A chart that plots data with rectangular bars representing the ...
  6. Vertical Line Charting

    A technique used by technical traders and market technicians ...
Related Articles
  1. Trading

    Range Bar Charts: A Different View Of The Markets

    While range bars are not a type of technical indicator, traders can employ this useful tool to identify trends and interpret volatility.
  2. Trading

    Candlestick Charting: What Is It?

    Discover the components and basic patterns of this ancient technical analysis technique.
  3. Trading

    Advantages Of Data-Based Intraday Charts

    We take a look at these chart intervals and how we can use them to our advantage.
  4. Markets

    Economics of Owning a Bar

    Understand what costs go into starting and running a bar, as well as what earnings can be expected. Learn whether or not it is smart to own a bar.
  5. Trading

    Gauging Entry And Exit Signals With Range Bars

    Wide range price bars often generate important signals that traders can use for timely entry or exit.
  6. Markets

    The 5 Most Powerful Candlestick Patterns (NUAN, GMCR)

    Statistics show unusual accuracy for the buy and sell signals of certain candlestick patterns like abandoned baby, evening star, and three black crows.
  7. Trading

    Using Bullish Candlestick Patterns To Buy Stocks

    These five popular candlestick chart patterns signal a bullish reversal in downtrend.
  8. Markets

    Stock Quotes Explained

    Curious about how stock quotes are compiled and what a trader should know about how? Read on.
  9. Investing

    The 5 Best Cities to Open a Bar in the US

    Understand what makes a bar successful and what is important about opening a bar. Learn about the top five cities to open a bar in the United States.
  10. Trading

    Heikin-Ashi: A Better Candlestick

    Enhance trend isolation and prediction of future prices with this technique.
RELATED FAQS
  1. What are the differences between a bar chart and candle sticks?

    Explore the difference between bar and candlestick charts. Learn how technical analysts use charts in the analysis of supply ... Read Answer >>
  2. What do the different colored candlesticks mean?

    Candlestick charts have been used in Western trading for many years and are a very popular method of plotting the price action ... Read Answer >>
  3. What are the most common Bullish patterns used by traders?

    Learn about some of the most commonly recognized bullish candlestick chart patterns that traders use to identify market turning ... Read Answer >>
  4. Are continuation patterns most useful when looking at Candlesticks?

    Learn the basics of using candlesticks to confirm continuation or reversal patterns and the vital role this plays in establishing ... Read Answer >>
  5. What are common strategies traders implement when identifying a Bullish Engulfing ...

    Learn how to trade using the bullish engulfing candlestick pattern to take advantage of, and profit from, strong moves upward ... Read Answer >>
  6. How do I Implement a forex strategy when spotting a Morning Star pattern?

    Learn how to design a forex trading strategy to use for trading the morning star candlestick pattern, an indicator of a bullish ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center