What is a line chart?

A line chart is a graphical representation of the price history of a certain digital asset. In this chart style, just the closing prices of securities are used and they are shown over time. Price charts may be used for any time period, but line charts, which are most often used to depict day-to-day price changes, are the most common kind of chart.

Because they do not take into account time intervals and instead focus solely on price fluctuations, line charts are similar to Kagi and Renko charts in that they imitate the Japanese chart style. 

Graphs with line breaks are created by a sequence of up bars and a series of down bars (referred to as lines). Obviously, upward lines reflect growing prices, whereas downward lines show dropping prices, etc. 

A line chart is used to determine whether the current closing price is the same as the prior closing price. Three lines are the most often used number of line settings. When applied to a particular stock, this is referring to comparing the present stock price to the stock price 2 periods ago. The price must be above the buy price to be considered an up-trend and below the sell, price to be considered a down-trend. When the price movement remains close to the closing price, a reversal signal will not be issued.

Workings of a line chart

When creating a line chart, one uses “markers” to place points on the chart, which are connected by straight lines. The information in these tables is interconnected by simple lines that make viewing easier. Many areas employ line charts, but they are especially beneficial when it is important to show how values change over time. 

Visual representations of values over time, such as changes in the prices of securities, corporate revenue sheets, and stock market indices, are commonly employed in finance with line charts. These features can also be used to compare securities from different issuers. In technical analysis, line charts are widely employed by investors to visualize trends. 

Line charts have several inherent restrictions. An example is when there are too many data points on a line chart, which obscures the overall meaning. The visuals are very simple to use to create various effects. 

Types of lines in a line chart

Only four kinds of lines exist:

• Up lines — Uptrend— Activate when there is an uptrend. 
• Down lines — When price moves down, new support and resistance levels are formed.
• Projected up lines — A hypothetical intraday uptrend that would be created based on the current price (before the actual closing price is set). 
• Projected down lines – throughout the course of a single trading day, a probable downside target may appear if the current price were to go up (before the actual closing price is set).