A chart that connects only the closing price of each period, hiding the highs, lows and opens.
A line chart draws one point per period, almost always the close, and joins them. It is the simplest possible view of price and the one non-traders are most used to seeing.
Because it throws away the wicks and intrabar swings, a line chart is surprisingly useful for seeing the shape of a trend without noise. Some traders draw support and resistance on a line chart specifically so that a single spike does not define a level, on the argument that closing prices represent settled agreement while intrabar extremes represent panic.
The cost is obvious: you cannot see how far price travelled inside the period, so a bar that ran 3% and closed flat looks identical to a bar that never moved. Never set stops from a line chart alone.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The parts of a candlestick. One candle sums up a slice of time: the thick real body runs from the opening price to the closing price, and the thin wicks reach out to the highest and lowest prices traded. Colour tells you which way the body ran.Support, resistance and the flip. Support is a price where buyers keep stepping in and the fall stops; resistance is a price where sellers keep stepping in and the rise stops. Once price closes above an old ceiling, that same level often acts as the new floor.
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