Line Charts

What are Line charts?

These are stock charts used in charting and study of chart patterns in technical analysis. These charts are created by connecting a series of data points together to form a line. This is the basic type of chart, common in many fields.

These charts by themselves are used to view the movement of the security's prices over a specific time period.

Its strength comes from its simplicity. It provides an uncluttered, easy to understand view of a security's price. It will use only one of the component of OHLC data. They are typically displayed using a security's closing prices.


How are Line charts constructed?

Line Charts are drawn using OHLC (open, high, low and close) stock data. Commonly 'close'   data is used. Successive close of each time frame are joined to make a single unbroken line.  Similarly these charts may be created by using either open, high or low price points.

Line Charts created using High and Low points, gives a channel of ranges. It can be an excellent tool for trading.

These lines can be color coded for better appreciation of the trend. Line joining successive higher closes or higher data numbers can be made green or blue and line joining successive lower closes or lower data numbers can be made red or orange. 

This graph is plotted between two perpendicular lines, called axis. The horizontal axis is called the x-axis and the vertical axis is called the y-axis.

Each axis represents one of the data to be plotted. Typically the y-axis represents the price of the stock and the x-axis represents the time factor.

The time factor is one of the important data in technical analysis. It is not considered in Swing Charts, Point and Figure Charts and Kagi Charts and time is less regarded in Equivolume Charts.


Study the chart given below and compare it with the bar chart. They both belong to the same stock and same time period.

Click on these charts to see bigger charts.


Line Chart for Technical Analysis in Stock Trading

Line is drawn joining the data points. Compare this chart with the Bar Chart given below.


Bar Chart for Technical Analysis in Stock Trading

Compare this Bar Chart with the Line chart above.




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Related Readings

There are many types of charts used in stock analysis. You may click on the name of each chart listed below to learn and understand more about them.

  1. Bar chart
  2. Bar charts also called as OHLC charts or open-high-low-close charts. They are used in charting and study of chart patterns in technical analysis. Each bar is a symbol created by connecting a series of price points, typically used to illustrate movements in the price of a financial instrument.

  3. Candle chart
  4. Candle chart or simply candlesticks charting is an ancient Japanese method of technical analysis. Candlesticks dramatically illustrate supply and demand concepts defined by classical technical analysis theories. Candlestick patterns not only display the absolute values of the open, high, low, and closing price for a given period in a format similar to the modern day, bar chart. But they also indicate trend continuation and trend reversal more clearly and more precisely.

  5. Candlevolume chart
  6. Candlevolume Chart combine the features of Equivolume charts and Candlestick charts. These charts have the wicks or tails and filled/unfilled body features of Candlestick charts, as well as the volume-based body width of Equivolume charts. This combination gives us the unique ability to study Candlestick patterns in combination with their volume.

  7. Equivolume chart
  8. Equivolume Charts display the relationship between price and volume in a bar. They presents a highly informative picture of market activity for stocks, futures, and indices. They differ from candlesticks by not considering open and close prices, and they differ from bar charts by not considering time factor.

  9. Kagi chart
  10. Kagi Charts differs from traditional stock charts, such as the Candlestick chart by being independent of time and volume.

  11. Point and figure chart
  12. Point and Figure charts just like in Kagi charts, disregard the passage of time and the chart changes only when the price changes. Rather than having price on the y-axis and time on the x-axis, these charts display price changes on both axis.

  13. Renko chart
  14. Just like in Kagi chart & Point and Figure chart, Renko charts also disregard the time factor in X axis. These charts are similar to Three Line Break charts except that a brick (or a line) is drawn in the direction of the prior move only if a fixed amount of the box size has been exceeded. The bricks are always of equal in size.

  15. Swing chart
  16. Swing charts are also called as Gann charts because their construction is based on W.D.Gann's method of trading. These charts disregard time factor and does not consider opening and closing prices.

  17. Three line break chart
  18. Three Line Break Charts originates from Japan and gets its name from the default number of line blocks typically used. They use an up block (line), a down block (line) and a reversal block (line). These charts disregards the time factor, which is usually plotted on the X axis, in commonly used stock charts.




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