OHLC Chart

An OHLC chart (Open–High–Low–Close) is a price-bar chart that displays four price points for each period: the opening price, the highest price, the lowest price, and the closing price. Traders use OHLC charts to assess momentum, volatility, and short-term price structure across any timeframe (e.g., 5-minute, hourly, daily).

How to read an OHLC bar

• Vertical line: shows the full range for the period (high at the top, low at the bottom).
• Left horizontal tick: the opening price for the period.
• Right horizontal tick: the closing price for the period.
• Bar color convention: bars are often colored to show direction (e.g., green/black when close > open; red when close < open).

Because the open and close are shown separately, OHLC bars reveal more information than a simple line chart (which only plots closes). OHLC and candlestick charts convey the same four data points; candlesticks use a filled or hollow “real body” to represent the open–close relationship, while OHLC uses horizontal ticks.

What each element tells you

• Vertical height (range): large height = high volatility or indecision; small height = low volatility.
• Relative position of open/close:
• Close well above open indicates strong buying during the period.
• Close well below open indicates strong selling.
• Open and close close together indicates indecision (little net movement).
• Position relative to high/low:
• If price rallied but closed well below the high, the rally may have fizzled late in the period.
• If price fell but closed well above the low, selling pressure may have eased before the close.

Common patterns and signals

• Trend and bar color balance: more rising-colored bars in an uptrend and more falling-colored bars in a downtrend reinforce the trend’s direction and strength.
• Key reversal:
• In an uptrend: price opens above the prior close, makes a new high, then closes below the prior low — a strong shift toward selling.
• In a downtrend: price opens below the prior close, makes a new low, then closes above the prior high — a strong shift toward buying.
• Inside bar: a bar whose high and low are within the previous bar’s range — often signals consolidation or indecision.
• Outside bar: a bar whose range engulfs the previous bar’s range — can indicate increased volatility and possible trend change.

Practical uses

• Momentum assessment: wide separation between open and close suggests strong intraperiod momentum.
• Volatility measurement: taller bars show larger intraperiod swings; useful for sizing trades or setting stops.
• Entry/exit clues: patterns like key reversals or outside bars can signal potential turns; combine with volume, trend, and other indicators for confirmation.

Example (conceptual)

On the S&P 500 ETF (SPY), a period of sustained upward movement was characterized by many rising-colored bars and several wider-ranging rising bars. Later, large wide red bars appeared — a clear signal of strong selling pressure and a warning that the prior advance may be reversing or correcting.

Key takeaways

• OHLC charts display open, high, low, and close for each period and work on any timeframe.
• The vertical range shows volatility; the relative positions of the open and close show buying or selling bias.
• OHLC and candlestick charts carry the same information; OHLC uses ticks for open/close while candlesticks use a body.
• Watch bar height, tick positions, color patterns, and formation patterns (key reversal, inside/outside bars) for trade cues, but always confirm with other analysis (volume, trend, indicators).

Sources and further reading

• Mark Andrew Lim, The Handbook of Technical Analysis, John Wiley & Sons, 2015.
• The John A. Dutton Institute, Lesson: Technical Analysis, Charting Methods.
• University of Nebraska–Lincoln, CropWatch: Charting Commodities — Bar Chart vs Candlestick Chart.