1. HLC chart:

The HLC chart is an upgraded form of a Line chart (line chart) - which only shows the closing prices of each day or small session. The HLC chart includes 3 display parameters:
Highest price - This represents the highest peak price touched during a session
  • Lowest price - This represents the lowest low price hit during a session
  • Closing price - This represents the closing price of a session.
  • The above illustration is a visualization of the HLC chart, with only 1 simple vertical bar, and 1 horizontal bar representing the closing price.
2. Why does the HLC chart remove the opening price?

The answer is very simple, that is something "redundant" and does not need to use, we discard. As you all know, the closing price of 1 trading day and 1 session is the most important price in the financial market. Closing price and crowd sentiment at the close often greatly affect the next day's session, and it is also the deciding factor for the trend. This is also due to part of the human "hesitant" mentality, we often act in the "last moments", so the volume at the end of the session is usually higher than at the open.

Of course, we cannot deny the importance of closing prices, but this is a personal "concept". For some traders, the opening price is not that important

3. This is an upgraded version of the Line chart:

The line chart is the most primitive chart in the financial market, it is a straight line connecting the closing prices during a session, showing trends in the market. However, the line graph only shows the trend, but does not show the strength/weakness of the trend in 1 session - represented by the price range:

A comparison between 2 charts on the same scale: The HLC bar chart shows that the downtrend is dominating more strongly than the Line chart.

4. Which traders are the HLC chart used for?

Another factor that influences the popularity of HLC charts is the fact that "Which trader is this chart suitable for?. For the time being, I think this chart format is suitable for some styles." the following transaction:

a. Momentum trading and price action:

This is an extremely simple trading method where the trader determines the closing price of the previous session. With the concept of "closing price is an important price", they will trade in the correct direction of the market in the previous session, containing "important" price bars, showing the momentum of a strong trend. Specifically as the following example:

b. Trading using chart patterns:

For chart-pattern traders, with traditional Breakout trading, they only need to use an HLC chart for the following reasons:
  • The high/low will act as the boundary link of the model.
  • The closing price confirmed the breakout signal.
Specifically as shown below:

In the illustration above, the top of the price bars (the highest price) determines the confirmation trendline of the 3-bottom pattern. While the close confirms the pattern is a valid pattern, you can buy on the break at the arrow. >>> Close price above the pattern!