Bar Charts

What are Bar Charts?

They are stock charts used in charting and study of chart patterns in technical analysis of stocks. They are also called as OHLC charts or Open-High-Low-Close charts. Each bar is a symbol created by connecting a series of above said price points. They are typically used to illustrate movements in the price of a financial instrument for a time period.

The time period may be in minutes of 5, 10, 15, 30, 60 etc; then we call it as 5 minute bar, 10 minute bar, etc; It may represent one full trading session of the day which we call as a day bar. It may represent a longer trading period like a week or a month or a year. Then it is called as a weekly bar, a monthly bar or a yearly bar respectively.

In olden times charts were drawn by hand by the trader. They were updating mostly day and weekly charts. Now with the computer we create any time frame charts just by a few clicks, in a few seconds.

This is the most commonly used chart.

How are they constructed?

Bar in a stock chart

To draw a bar chart, OHLC that is 'open, high, low and close', stock data is used. Hence the name OHLC chart.

A vertical line is drawn from high price point to low price point. A tick mark is placed on left of the line, attached to it, corresponding to the opening price, i.e. starting price (first price) for that time period.

Similarly a tick mark is placed on right of the line, attached to it, corresponding to the closing price (last price) for that time period. 

Up Bar and Down Bar

These bars may be given different colors depending on whether prices rose or fell in that period. For example blue or green color for an up bar and red or orange for a down bar.

What are different types of bars?

Types of bars – Up Bar, Down Bar, Inside Day, Outside Day

If the high and low of a bar is higher than previous bar, then that bar is called an 'up bar' or an 'up day'. If the high and low of a bar is lower than previous bar, then that bar is called an 'down bar' or an 'down day'.

Some chartists call a bar with close higher than the open as an up bar or an up day and a bar with close lower than open as a down bar or a down day.

If the high of present bar is higher than previous bar and the low present bar is lower than previous bar, then present bar is termed as an 'outside day'.

If the high of present bar is lower than previous bar high and the low of the present bar is higher than the low of the previous bar, then the present bar is termed as an 'inside day'.

Study the bar chart given below and compare it with any other type of chart.

Bar chart for technical analysis of stocks

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Related Readings

    There are many other types of charts used in stock analysis. You may click on the name of each chart listed below to learn and understand more about them.

  1. Candle chart
  2. Candle chart or simply candlesticks charting is an ancient Japanese method of technical analysis. Candlesticks dramatically illustrate supply and demand concepts defined by classical technical analysis theories. Candlestick patterns not only display the absolute values of the open, high, low, and closing price for a given period in a format similar to the modern day, bar chart. But they also indicate trend continuation and trend reversal more clearly and more precisely.

  3. Candlevolume chart
  4. Candlevolume Chart combine the features of Equivolume charts and Candlestick charts. These charts have the wicks or tails and filled/unfilled body features of Candlestick charts, as well as the volume-based body width of Equivolume charts. This combination gives us the unique ability to study Candlestick patterns in combination with their volume.

  5. Equivolume chart
  6. Equivolume Charts display the relationship between price and volume in a bar. They presents a highly informative picture of market activity for stocks, futures, and indices. They differ from candlesticks by not considering open and close prices, and they differ from bar charts by not considering time factor.

  7. Kagi chart
  8. Kagi Charts differs from traditional stock charts, such as the Candlestick chart by being independent of time and volume.

  9. Line chart
  10. Line charts are created by connecting a series of data points together to form a line. This is the basic type of chart common in many fields.

  11. Point and figure chart
  12. Point and Figure charts just like in Kagi charts, disregard the passage of time and the chart changes only when the price changes. Rather than having price on the y-axis and time on the x-axis, these charts display price changes on both axis.

  13. Renko chart
  14. Just like in Kagi chart & Point and Figure chart, Renko charts also disregard the time factor in X axis. These charts are similar to Three Line Break charts except that a brick (or a line) is drawn in the direction of the prior move only if a fixed amount of the box size has been exceeded. The bricks are always of equal in size.

  15. Swing chart
  16. Swing charts are also called as Gann charts because their construction is based on W.D.Gann's method of trading. These charts disregard time factor and does not consider opening and closing prices.

  17. Three line break chart

    Three Line Break Charts originates from Japan and gets its name from the default number of line blocks typically used. They use an up block (line), a down block (line) and a reversal block (line). These charts disregards the time factor, which is usually plotted on the X axis, in commonly used stock charts.

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