U.S. equities recovered in the final hour of trading Thursday to cap a choppy session in the green as investors continued to digest a hawkish print of minutes from the last FOMC meeting. The S&P 500 shifted losses to rise 0.4%, and the Dow Jones climbed roughly 0.3% after plummeting over 300 points in the first half of the session. The Nasdaq Composite bounced back from a dip of more than 1% to close just above breakeven.
In most of the world, ETFs are simply tools that allow investors to track a certain set of stocks. In Japan, they’ve been tasked with everything from market support and inflation to speed economic growth, promoting corporate governance, and even fostering gender equality.
With such broad objectives, the Japanese central bank has amassed an astounding 80 percent of the country’s ETFs—equivalent to around 7% of its $6 trillion stock market—in less than a decade. This is significantly more than any other central bank in the world has gone to try to stimulate its economy through equity purchases. With $3.7 trillion in net bond purchases, the Bank of Japan has likewise surpassed its peers.
But nine years and a few hundred billion dollars worth of ETF purchases later, the most striking consequence of the world’s boldest monetary experiment may be catastrophic: The BOJ is stuck with a vast portfolio it might not be able to get rid of.
As he prepares to leave away in 2023, BOJ Chair Haruhiko Kuroda remains tight-lipped regarding his exit strategy; the difficult challenge of offloading the BOJ’s position without igniting a big stock selloff will now fall to his successor. It could take decades, if not generations, to do this. Already the largest stock market intervention in central bank history, it has drawn criticism for failing to live up to expectations.
Main Pairs Movement
The sentiments were still dismal as the attention remained on central banks’ hawkishness and tensions between Kremlin and the western world. The US has enlarged its actions against Moscow, hitting Russian Sberbank and Alfa Bank and prohibiting investment in the country by American companies. Meanwhile, the EU has supported a Russian coal embargo, though without officially announcing it. The dollar remained robust.
On Thursday, Ukraine has presented a new agreement proposal, although it includes discussing the situation of Crimea and Donbas, something that Russia considers unacceptable. The European Central Bank has published the Accounts of its most recent meeting. The memo revealed that policymakers believe the bond-buying program has now met its goal and that halting it in the summer would pave the way for a 3Q rate hike.
The Euro pair trades around 1.0870, while Cable stands at 1.3070. The dollar gained ground versus its safe-haven counterparts, with USD/CHF trading near 0.8340 and USD/JPY near 124.00. Commodity-linked currencies lost momentum, with the AUD/USD falling to 0.7470 and the USD/CAD rising to 1.2585.
Gold changed hands at $1,934 a troy ounce, up for a third consecutive day higher by 0.33%. Crude oils, on the other hand, kept their price slides at the start of Friday, with WTI trades at $96.40 at the time of writing and Brent at $100.80.
Technical Analysis
AUDUSD (4- Hour Chart)
AUDUSD continues to retreat, now nearly 200 pips lower since Tuesday’s hawkish RBA. On the four-hour chart, AUDUSD is on the last defensive point to remain in its bullish stance. Failure to defend the immediate support level at 0.7471 will bring the currency pair to the next level at 0.7432. On the upside, with the RSI is nearly oversold and the MACD is edging on the midline, the Aussie might find decent support at 0.7471, or psychological support at 0.7400. The acceptance above 0.7536 will help AUDUSD regain strength. Further price action eye on the tension between Russia and Ukraine and the sanctions from both the US and the EU.
The Nasdaq 100 continues to edge lower for a third day as the time of writing following the Fed signals a speedier policy tightening plan. From the technical perspective, the outlook of the Nasdaq 100 remains upside in the near- term as the MACD remains positive. At the moment, MACD is on the edge of crossing, implying that if the Nasdaq 100 fails to defend the current support pivot at 14486, then it will accelerate further south. On the flip side, the index needs to climb above 15689 in order to reclaim its bullish trend in the longer term.
EURUSD erases early gain on Thursday as the tensions are mounting in France’s presidential election race. A Le Pen victory can potentially drag the euro down. From the technical aspect, the outlook of the EURUSD remains bearish as it continues to trade in the lower bound of the Bollinger band. In the meantime, falling below the 20 and 50 Simple Moving Averages also shows that EURUSD is adding another bearish layer. The RSI indicator and the MACD both continue to fall in the negative territory, meaning the absence of dip-buying. Overall, the risk sentiment is sour as the crisis in Ukraine sees no end, boosting the safe- heaven, the US dollar.
Warmly reminds you that the component stocks in the stock index spot generate dividends. When dividends are distributed, VT Markets will make dividends and deductions for the clients who hold the trading products after the close of the day before the ex-dividend date.
Indices dividends will not be paid/charged as an inclusion along with the swap component. It will be executed separately through a balance statement directly to your trading account, the comment for which will be in the following format “Div & Product Name & Net Volume ”.
Please note the specific adjustments as follows:
Note: The above data is for reference only, the actual execution date may be changed, please refer to the MT4/MT5 software for details.
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U.S. equities dropped on Wednesday as investors eyed more hawkish actions from key Fed members. It is suggested that more monetary policymakers were open to moving aggressively to raise interest rates and bring down demand and persistently escalated inflation. The S&P 500 fell, adding to losses after it ended Tuesday’s session lower by 1.3%. The Dow Jones and Nasdaq also extended declines.
Fed officials unveiled a long-awaited plan to shrink their balance sheet by more than $1 trillion annually while boosting interest rates “immediately” to combat the highest inflation in four decades. The path forward for selling the assets they acquired during the pandemic was outlined Wednesday in the minutes of their March meeting, during which policymakers boosted interest rates by a quarter-point. They considered expanding but chose caution in light of the uncertainties created by Russia’s invasion of Ukraine, according to the transcript of their discussion.
Additionally, “many” attendees at the March 15-16 FOMC meeting believed that one or more half-point rises might be warranted in the future if price pressures continue to rise. Analysts interpreted this as evidence that officials now believe they should have acted more aggressively against inflation and are rushing to bring their main rate — which is currently in a target range of 0.25 percent to 0.5 percent — up to neutral; the theoretical level at which the economy neither accelerates nor slows.
Officials proposed shrinking the Fed’s balance sheet at a maximum monthly rate of $60 billion in Treasury securities and $35 billion in mortgage-backed securities – in line with market expectations and nearly double the peak rate of $50 billion a month during the last balance sheet trim from 2017 to 2019.
Main Pairs Movement:
On Wednesday, the greenback regained momentum as attention remained focused on the Eastern Europe war and hawkish central banks. The Euro/USD pair is trading below 1.0900, while the Cable is trading near 1.3070. Commodity-linked currencies continue to face intense selling pressure, with the Australian dollar finishing at 0.7510 and the Canadian dollar at 1.2530.
President Joe Biden of the United States issued an executive order prohibiting new investments in Russia. On the other hand, European leaders have been unable to achieve an agreement on a ban on Russian coal, despite their assertion that it was due to a technical glitch and that they would discuss it again on Thursday. Meanwhile, President of the European Commission Ursula von der Leyen stated that further penalties against the Kremlin will not be the last.
Later that day, the US Federal Reserve released the Minutes of its most recent meeting, reassuring market participants of the central bank’s strong attitude. Policymakers are determined to “rapidly” bring monetary policy to a state of neutrality. Additionally, the statement states that “participants emphasized that, depending on economic and financial developments, a shift toward a tighter policy stance may be justified.”
In terms of commodities, gold prices have remained consistent, currently selling at roughly $1,924 per troy ounce. Crude oil prices fell dramatically, weighed down by Wall Street’s dovish tone, and are now hovering around $97.00 per barrel. Global indices closed lower, with US indices pulled down further by the FOMC Meeting Minutes.
Technical Analysis
AUDUSD (4- Hour Chart)
AUDUSD edges lower on Wednesday, failing to head further north from the highest since June 2021, around 0.7460. From the technical aspect, the outlook for AUDUSD remains bullish as the dip- buying should help limit losses; at the moment, 0.7500 holds the key for the bulls. If AUDUSD drops below the support level around 0.7500, then it will enter a temporarily consolidated phase in the range of 0.7471 and 0.7536. The RSI reading is currently hovering around the midline, showing the directionless of the currency pair. If the dip-buying can hold and defend the current support pivot, then AUDUSD is expected to resume its bullish trend. On the flip side, as the MACD lines are in the crossing section, any meaningful downside momentum might accelerate further south.
Resistance: 0.7640, 0.7700
Support: 0.7536, 0.7471, 0.7432
Gold (4-Hour Chart)
Gold extends consolidation above $1900, still unable to attract buyers or sellers as per trading in quite a limited intraday range. Further price action eyes on the outcome of the FOMC meeting and the new sanctions from the US and the EU. From the technical perspective, the outlook of gold has limited bullish potential, offering a neutral stance at the time of writing. The RSI continues to hover around the midline, showing the directionless. Any meaningful upside momentum above $1951 will potentially turn gold into bullish in the near- term. On the other hand, failure to defend $1923, then bears will likely attract more selling pressure.
Resistance: 1951.78, 1974.4363
Support: 1923.7477, 1878.4351
EURUSD (4- Hour Chart)
EURUSD holds tight above 1.0900 ahead of the FOMC Minutes. From the technical point of view, EURUSD remains in a bearish stance as it continues falling below the ascending trendline in the near- term. On the 4- hour chart, EURUSD has a meaningful pullback after hitting the lower band of the Bollinger band. At the same time, the RSI has reached the oversold territory but turns flat within the negative levels afterward, implying absent buying interest. The immediate support awaits at 1.0806.
You probably know by now that the financial market can be volatile and unpredictable. This is why it’s your responsibility as a trader to learn all the tools, strategies, and disciplines that will help you make intelligent decisions when trading.
One of the key aspects you need to master is technical analysis.
What is technical analysis?
In essence, technical analysis is a strategy or method where past data, such as indicators and price actions, help a trader make the best decision for future trading.
This theory comes from the belief that the buying and selling actions of traders reflect the information related to a particular instrument.
Multiple technical traders also believe that current or past price movements are the most reliable indicators of future price movements.
What are the common mistakes made by traders?
Data accuracy is critical to the efficiency of any technical analysis in trading. So, if you want to be successful at using this strategy, here are some common mistakes that you need to avoid:
You go in without a plan. The technical analysis begins with a good framework that will guide you throughout the gathering and analysing of the data you have. Without one, you’ll only waste your time and resources without getting accurate results.
You want your charts to look good. Of course, we’d like our charts to look good. More than anything, they have to be accurate. As a trader, you don’t want to add indicators to make your chart look perfect. It’s more important to gather data you need and that can influence your trading decision positively.
Mistakes can lead to huge risks that can make or break your trading account. As much as possible, avoid these mistakes when trading to ensure earning potential.
What are the most common technical analysis indicators?
Technical analysis has evolved over the years, with analysts now using different trading systems to help them create forecasts on price movements. Depending on what you want to focus on, a technical analysis indicator can offer information on current market trends, the continuation of these trends, and support and resistance areas.
In general, technical analysts use the most common indicators, including chart patterns, support and resistance levels, price trends, moving averages, and volume and momentum indicators.
What’s the difference between technical analysis and fundamental analysis?
Both technical and fundamental analyses are crucial methods in analysing the markets, although they are at opposing ends of the spectrum.
Fundamental analysis uses methods that attempt to measure the intrinsic value of an instrument. This means analysing data related to industry conditions and the overall economy since they can influence a trade.
On the other hand, technical analysis only uses data from an instrument’s volume and price, following the belief that one can factor all fundamental indicators into pricing. For this reason, there’s no need to look at them. Instead, technical analysis focuses on charts to identify trends and patterns that can influence future trades.
Fundamental analysis takes more time because it looks at more types of data to give a clear picture of the situation of an instrument and its trading potential. Technical analysis offers a faster way to analyse data and make future trading decisions based on them.
Conclusion
As a trader, you must learn how to maximise technical analysis as a tool to build your portfolio, increase your earnings, and create a stable financial future for you and your family. In a competitive world like trading, it is essential to equip yourself with the best trading tools to succeed and protect yourself against losses.
Trade with a regulated multi-asset broker, VT Markets.
US stocks wavered on Tuesday, dragged down by losses in tech, as investors weighed remarks by Fed Governor Lael Brainard that indicated policymakers were ready to act more aggressively to rein in inflation. Investors also monitored reports indicating the US and EU are expected to unveil more sanctions against Russia on Wednesday. The S&P 500 tumbled 1.26%, and the Dow Jones shed 280 points after climbing for two straight trading sessions. The Nasdaq Composite plunged 2.3%, which is its biggest drop in three weeks, and erase gains from a tech rally that helped the index pop on Monday.
The U.S., European Union, and Group of Seven are coordinating on a fresh round of sanctions on Russia, including a U.S. ban on investment in the country and an EU ban on coal imports, following the discovery of civilian murders and other atrocities in Ukrainian towns abandoned by retreating Russian forces.
The governments plan to increase penalties on Russian financial institutions and state-owned enterprises and will sanction unspecified Russian officials and their family members, said White House Press Secretary Jen Psaki.
“You can expect that they will target Russian government officials, their family members, Russian-owned financial institutions, also state-owned enterprises. It’s a part of the continuation of our efforts to put consequences in place, hold Russian officials accountable,” Psaki told reporters Tuesday, adding that an announcement would come Wednesday.
On the news of the new penalties, the ruble seems unaffected and remained sidelined against the greenback.
Main Pairs Movement
The American dollar is the overall winner on Tuesday as it outperformed all of its major rivals. Diminishing chances of a diplomatic solution to the Russia-Ukraine conflict and central banks’ aggressiveness shifted the investors to again embrace the safe-haven greenback.
At the beginning of the day, the Reserve Bank of Australia abandoned its patient stance, announcing an unexpected boost to the local currency. Governor Philip Lowe dropped the sentence “prepared to be patient” from its usual statement and hinted at an interest rate hike in June; in the American afternoon, US Fed Governor Lael Brainard hinted at an aggressive reduction of the balance sheet and noted that combined with rate hikes would move monetary policy closer to neutral later this year. His words sent the yield on the 10-year Treasury note to 2.567%, now holding nearby. Looking ahead, the US FOMC meeting minutes will be published later today.
The Euro pair plunged to 1.0900 while Cable trades around 1.3076. Aussie managed to retain some of its post-RBA gains but pulled down from a fresh 2022 high of 0.7660. USD/CAD nears 1.2500 as crude oil prices edged sharply lower, with WTI currently hovering around $101.50 a barrel, and Brent at $106.10. Gold traded as high as $1,944.56 a troy ounce, now struggling around $1,920, amid renewed demand for the greenback.
Technical Analysis:
AUDUSD (4- Hour Chart)
The Aussie maintains its strong bid tone against the US dollar on Tuesday as the Reserve Bank of Australia loses its patience with the inflationary pressure, signaling the interest rate hike in June. From the technical perspective, AUDUSD has now entered a bullish consolidated phase following the breach of the resistance at 0.7600. The current RSI reading has reached the overbought territory, implying that the upside strength of the currency might pause for a brief adjustment. The pullback might now seem to find a decent support level at 0.7600. Since the MACD indicator continues to support the buyers, some follow-through buying will be seen as a trigger to push AUDUSD toward the psychological resistance at 0.7700.
Resistance: 0.7700
Support: 0.7600, 0.7471, 0.7432
Gold (4-Hour Chart)
Gold turns south following a jump above $1940. On Tuesday, gold once surged above $1940, but rapidly pullback to nearly $1930 as the time of writing after the Federal Reserve Governor Lael Brainard indicates that the central bank needs to take action on inflation by shrinking the balance sheet rapidly. From the technical aspect, the four-hour outlook of gold remains neutral as gold continues to consolidate between $1950 and $1920. In the meantime, the RSI reading hovers around the midline, showing the lack of buyers and sellers. On the upside, gold needs to offer an initial hurdle above $1951.78 to reclaim a bullish stance. On the flip side, failure to defend the immediate support at $1923 will attract sellers to attack the four-day lows near $1915.
Resistance: 1951.78, 1974.4363
Support: 1923.7477, 1878.4351
EURUSD (4- Hour Chart)
EURUSD experiences a difficult time shaking off the bearish pressure since last week as the US dollar is supported by the hawkish Fed and the upbeat ISM Services PMI data. From the technical perspective, the outlook of the EURUSD remains bearish, developing below its moving averages. At the same time, the intraday downside pressure has dragged EURUSD below its immediate hurdle at 1.0969. The downside break-through, it will increase near-term selling interest. The support level awaits at 1.0806. On the upside, EURUSD needs to climb above the near-term ascending trend line, which is around 1.1018 in order to reclaim short-term upside momentum.
The financial markets began the week with modest changes across asset classes as investors anticipated the latest central bank remarks and events in Ukraine, while also anticipating the start of the corporate earnings season next week. Meanwhile, US equity markets began the week on a positive note, with the NAS100 rising 2.10 percent on the strength of many technology stocks, the SP500 rising 0.82 percent, and the DJ30 rising 0.31 percent, according to MT4 VT Markets data.
Source: Shutterstock | Twitter as one of the market movers on Monday
Negotiators from Russia and Ukraine will restart video talks on Monday, following the European Union’s condemnation of Russia’s military atrocities in multiple Ukrainian cities and President Joe Biden’s statement that Vladimir Putin might face a war crimes trial. This diminishes the likelihood of a breakthrough in the peace process.
Meanwhile, the Treasury yield curve is indicating a slowdown in economic development as the Federal Reserve boosts interest rates to rein in inflation. For the first time since 2007, the US two-year yield has surpassed the 30-year barrier, signaling an inversion on the other side of the curve. The Fed’s minutes this week will provide additional context for a probable 50 basis point rate hike in May and clarify the central bank’s balance sheet reduction strategy.
It’s going to be more and more difficult for businesses in Canada to meet demand and keep up with demand, and that will make people think the Bank of Canada is going to start raising interest rates very quickly. In the central bank’s quarterly survey of business leaders, most companies say they are having trouble meeting unexpected demands.
Main Pairs Movement
In the United States, technology stocks surged, led by Twitter (TWTR), which nearly doubled from Friday’s close. TWTR finished Friday at $39.17 and opened Monday at $47.86, before advancing to $50 in Monday trade, owing to CEO Elon Musk’s 9.2% shareholding.
Starbucks (SBUX) shares opened sharply lower, from Friday’s close of $91.03 to $87.89, having continued their drop to $86.18 before closing at an opening price of $87.75 due to founder Howard Schultz suspending a share-buyback program.
WTI crude oil prices increased beyond $103 per barrel, or 4.54 percent, as traders considered China’s Covid outbreak and attempt to tap strategic supplies.
The USDX (US Dollar Index) increased by 0.38 percent, while the XAUUSD (Gold Index) increased by 0.44 percent. Numerous major currencies traded in a range of directions; EURUSD dipped 0.58 percent, while AUDUSD surged 0.74 percent. EURGBP’s 0.68 percent decline allowed GBPUSD to climb by 0.18 percent.
Technical Analysis
GBPUSD (4-Hour Chart)
GBPUSD is consolidating in the range of 1.3080 to 1.3126. GBPUSD remains trapped between resistance levels of 1.3126 and 1.3188, with support at 1.3080. On the four-hour chart, GBPUSD is trading below its 50-day, 100-day, and 200-day simple moving averages (SMAs).
Resistance: 1.3126 | 1.3188
Support: 1.3080
EURUSD (4-Hour Chart)
EURUSD is continuing its drop, having breached and fallen below the support level of 1.1000. The 1.1000 level becomes resistance, with the possibility of further EURUSD weakness. The support levels intended are 1.0952 and 1.0932. On the four-hour chart, the EURUSD is trading below its 50-day, 100-day, and 200-day simple moving averages (SMAs).
Resistance: 1.1000. 1.1040
Support: 1.0952, 1.0932
XAUUSD (4-Hour Chart)
XAUUSD has been unchanged over the last week, trading between $1921 and $1948, with resistance near $1936. XAUUSD is still clinging to $1921 as a support level, with $1910 and $1893 is the next two levels of support. Meanwhile, the resistance levels of $1936 and $1948 remain in play. XAUUSD is currently trading below its 50-day, 100-day, and 200-day simple moving averages on the four-hour chart.
Forex orders are an essential part of the trading process. An order is a request to buy or sell a currency at a given price. The type of order you use can affect how quickly you get your desired currency and how much you pay.
This lesson will teach us about the different types of forex orders.
Market Order
A market order is a direct execution. Once you see the price you want, click buy or sell in your platform’s order window.
If you think the price will go up and you want to buy, click “Buy by Market.”
You must remember though that you might get a slippage if you buy something on the market.
What is slippage?
Slippage refers to the contrast between the expected price of a trade and the price at which it was executed. The term is used in all trading markets but is most common in Forex and futures markets.
This difference can be due to many factors, such as market volatility, liquidity issues, or high-frequency trading. Slippage can also occur when there are too many orders to fill at one time.
For example:
Let’s say the price is 0.71533, and you want to sell at that price. When you click “Sell by Market”, you would expect the same price at 0.71533. But because of slippage, you’ll get 0.71534 instead, which is slightly better. This is because the market moves so quickly that the price already shifted when you clicked.
To close a position using the market order, you can open the same order page by clicking on the open position in the terminal section on the MT4. The exact order page will open up.
Source: VT Markets MT4
The image above says, “Close #18501322 sell 1.00 AUDUSD-ECN by Market” in yellow. Click on that, and remember that when you close a Sell position, you will get the Ask price, which is, in this case, 0.71504 (take note that it may get slippage too).
Limit Order
A limit order is a pending order you place when seeking a better entry price. There are two options: Buy Limit and Sell Limit.
Source: VT Markets MT4
Buy Limit Order – Set a Buy Limit if you wish to buy below the current price.
Source: VT Markets MT4
Sell Limit Order -Set a Sell Limit if you want to sell above the current price.
For example, if the market is moving in a range, you may notice that they always rebound at similar price levels.
As shown in the illustration, the price always bounces back up when it reaches a lower level and then falls when it comes to a higher level.
After some research, you might find out that this range movement will continue for some time, and you wish to benefit from it.
The price is now trading in the midway of those levels. So, rather than waiting for the price to reach those levels, you can set a Sell limit at the higher level or a Buy limit at the lower level.
Consider the following example:
Source: VT Markets MT4
As you can see from this chart, there is a range movement with some higher and some lower highs and lows.
It also shows that the price is currently moving in the middle. Supposing you want to open a buy position, but you want to buy near the lower levels. So you decide to put a Buy Limit Order above the lower levels.
Source: VT Markets MT4
After the price moves, as shown in the chart above, you may have correctly analyzed it. Your Buy Limit Order has converted to a Buy Order automatically.
Stop Order
A stop order is a pending order that you place when you feel a particular price will result in market continuation. There are two options:
Place a Buy Stop if you want to buy above the current price.
Place a Sell Stop if you want to sell below the current price.
Source: VT Markets MT4
As a result, when the price reaches specified levels, the position will automatically open for Buy or Sell at a price stated in the orders.
Therefore, if we look at the sample above, we can see a ranging movement and two borders, one higher and one lower. That border will eventually be broken if the price begins to trend.
After some analysis, you concluded that if the price breaks through the upper border, it will continue to rise until it reaches the target level. Thus, you can place a Buy Stop order above the higher border, assuming that you will automatically open a Buy position if the border breaks. If the market continues to rise, you will profit.
You may also have determined that if the price breaks through the lower border, it will continue to rise until it reaches the target level. Therefore, you can place a Sell Stop order for this below the lower border, assuming that if the border breaks, you will automatically open a Sell position. If the market continues to decline, you will profit.
Source: VT Markets MT4
Consider the following example:
Source: VT Markets MT4
As you can see from this chart, there is a range movement with some higher and some lower highs and lows.
Assuming that the price would rise when it breaks through the higher levels, you place a Buy Stop Order above the higher levels.
Source: VT Markets MT4
After the price moves in the way shown in the chart above, you may have correctly analyzed it. Your Buy Stop Order has converted to a Buy Order automatically.
These higher and lower levels are commonly referred to as Support and Resistance Levels, which will be tackled in the next lesson.
It is critical to observe the movement of prices in Forex trading. There are several ways to accomplish this, including seeing the ticker in real-time. But the most popular method is to display prices on a chart, which enables you to observe how prices respond at crucial moments.
Traders use prominent chart types, including line charts, candlestick charts, and bar charts. Each chart type presents data uniquely and has distinct advantages.
Line Charts
Line charts are the most straightforward to understand, primarily because line charts only display closing prices. Thus, they eliminate “noise” generated by less crucial trading times of the day, such as the open, high, and low. Line charts typically depict a single line that connects all of the period’s closing values – the following is an example of how the XAUUSD daily line chart looks:
Source: VT Markets MT4-VIP
Since closing prices are often seen as the most relevant, it’s easy to see why investors and traders like line charts.
Line charts provide a concise, simplified snapshot of the current market condition and are typically the best choice for individuals seeking a fast glimpse of the market’s direction.
Bar Charts
Bar charts, commonly called OHLC charts, depict four critical points: the Open, High, Low, and Close (OHLC) of a given period. Consider it an enhanced version of the line chart, as it reveals additional information that can be used to aid in trade research and uncover additional information about specific price moves.
For instance, if the space between the Open and Close bars is vast, it indicates that the price made a significant move during that bar. Combining a few of these might indicate a period of extreme volatility.
Source: VT Markets MT4-VIP
Not only can you see how prices are displayed in terms of bars in the same XAUUSD chart example above, but you can also see how there are periods of high and low volatility. This is very important in trading because it identifies periods and locations of high interest and indecision.
Candlestick Charts
The candlestick chart is the most popular type of chart. Candlestick charts are composed of two distinct components: the body and the shadows (wick). The top and bottom of the body provide information about the opening and closing prices over the specified period. The shadows at the top and bottom indicate the highest and lowest prices reached within the specified period.
Candlestick charts, like bar charts, display the Open, High, Low, and Close in a different format. Indeed, many traders regard the candlestick chart as an enhanced version of the bar chart, as the additional information displayed allows for the creation of candlestick patterns (more on that later), which enables us to read the markets in ways that bar charts and line charts do not.
Typically, the candle body will be red if the closing price is less than the opening price. The body will be green if the closing price exceeds the opening price. In this scenario, red candlesticks indicate a price decline, while green candlesticks indicate a price increase.
Source: VT Markets MT4-VIP
Using the same XAUUSD example, you can observe how prices seem different on a candlestick chart.
Important note: While red and green are typical colours for displaying falling and rising values, additional combinations such as black/white or blue/orange (like the sample below) may exist.
Source: VT Markets MT4-VIP
The most important thing is to know why they are formed so that the colours representing them can make it easier for us to figure out what they mean.
Insights 
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