In Forex Trading, price is everything and if you look carefully, the price at different time will inform you valuable information if you interpret if carefully. Most traders will look out for these 4 keys price indicator in a bar chart, which is Highest price, Lowest price and Open and Close price.
Bar Chart (Candle stick)
This is actually commonly refer to candle stick in the trading community. Invented by a Japanese rice trading in the 18th century. Every bar consists of a body and with upper and lower wick. The body can be of any 2 colours which will depend on the open and close price. The upper wick will extend to the highest price and lower wick will extend to the lowest price. By simply looking at the bar or candle stick, you can tell if the trend is rising or dropping.
If you find close price higher then open price, this indicate a trend to go higher. If you find a long upper wick and a short lower wick, this indicates a lot of support to go higher. Look into smaller timeframe to see the smaller bars to see if the price is trending up. If the above 3 stand true, you will have a buy trade.
If you find close price lower then open price, this indicate a trend to go lower. If you find a long lower wick and a short upper wick, this indicates a lot of resistance to go lower. Look into smaller timeframe to see the smaller bars, if you find similar and trend going down, will all above 3 same, you will have a sell trade.
Which Time Frame Charting?
In most cases, I will look at H4 timeframe to get a feel of the currency market trend as it roughly divides the trading cycle into 6 slots which gives a very good visual of the days trades and weekly general direction. Then I will zoom into the 15 or 5 minutes time frame. The reason I choose this is a good guage of any trend to start forming within 1 hour, especially the opening and closing and cross of different finances market through out the days.
Body Vs Wick
A tall or fat body will be favourable over short or thin body. A longer wick is favourable over a shorter wick. By comparing the difference, you can find very favourable trades when the currency is trending. Another trick is to look at the body position. A low position body with long wick is favourable to beginning of a up trend. This applies same for the down trend. Many hundred of pips trend begins in this way. Another observation is to have the body lower then 50% mark. This is another indicator of the forming of a trend in the currency price.
There is numerous naming of different candle stick pattern which am not covering here. You can go Google for more information. What I intend to cover is more on the application of this HLOC bar.