Understanding Line Chart in Technical Analysis
Since the world around us is becoming more and more data-centric day by day, we see line charts in our daily life all around us. One of the most common line chart examples has to be stock market graphs. Line graphs or charts can potentially be used to demonstrate the variation in any set of data, for example, population increase or decrease, increase and decrease in COVID-19 patients, etc. A line graph chart is simple to understand as it only depicts variation in data concerning other factors. Such factors may be time. Let us understand, what is a line chart?
What is a Line Chart?
A line chart is nothing but a simple statistical demonstration of any kind of data. A line graph chart is a visual depiction of a stock's recent market activity that uses consistent lines to link a sequence of statistical segments. It is the most basic sort of chart in statistics, as it usually merely shows the ending values of security throughout a specific period. A line chart may be employed at any timescale, however, it is primarily and commonly employed to show daily market fluctuations. Further, you may understand this concept better with line chart examples.
Line Chart Examples
The line graph shown in the examples depicts the sale of apples from an apple vendor from December to march. In the given graph the x-axis represents the time and the y-axis depicts the number of apples sold in kgs. A data point is represented by a black spot on the chart. On a linear chart, a data point indicates a value or a statistic that corresponds to a specific moment upon the x-axis. In the given example there has been a total sale of 25kgs, thus the data point is between 20 and 30.
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Why Are Line Charts Drawn?
A line chart or graph is drawn to compile two individually independent sets of data on two axes to track a variation, be it regular or irregular. Data of both sets can easily be understood via line graph description.
Line Chart in Technical Analysis
The observation of regularities in stock market value is among the key ways used among technical analysts to anticipate stock pricing, and the simplest approach to recognize changes over time is via the usage of graphs. Technical analysts are commonly referred to as chartists because of their extensive use of graphs. Although there are a variety of charts used by technical analysts we will study a line chart in technical analysis.
Linear graphs are the most basic type of graph, illustrating value variations throughout a period. Just the final value is generally charted, and it is represented by a specific juncture. The term comes from the fact that a line is formed by a sequence of such dots. Daily value movements, on the other hand, can be charted by both graphing every move or picking the latest value of a particular period, like an hour or 30 mins. Since line charts are so basic, comparing the values of numerous stocks or indices on the very same chart is much simpler.
Line Chart Uses
Line charts are used to represent continuous data. A line chart can be used in a variety of places, from daily life applications to the application of a line chart in technical analysis. The statistics produced from exploring, evaluating, and collecting data may not necessarily be sufficient to accurately depict the dynamic shifts.
Line graphs are employed in situations like these to show the precise pattern in the research dataset. One can tell if the input is rising or dropping by looking at the slopes. If the slope is downwards, it means the value is declining and vice versa. The period component may be utilized to depict variations in any statistical aspect, but various periodical variables like heat, aging, range, etc are all line chart uses.
A line chart is very flexible as it can be drawn freehand as well as with technological software like MS. excel, Ms word, etc. A line chart was initially discovered by four people namely, Nicolaus Samuel Cruquius, Francis Hauksbee, William Playfair, and Johann Heinrich Lambert.
FAQs on Line Charts
1. What is line chart type?
A basic line chart, a multiple line chart, and a compound line chart are the three primary forms of line charts used in statistics. A solitary line is drawn in a basic line graph. A basic linear chart depicts the connection among 2 factors, such as the month of the year a stock's price and its variations. A dual-line chart is a chart having 2 or even more lines drawn on it. It's utilized to show the changes in the set of factors during the given span of period. Once data is separated among several kinds, a compound line graph is utilized. A compounded line graph is a variation on the basic line graph that displays the whole set of statistics as well as the various categories of data.
2. What are line chart examples?
A linear graph is a type of graph that depicts the evolution of data through a duration. A timeframe, such as a min, hours, days, months, or years, is commonly displayed on the x plane. For instance, one might make a line graph that depicts a shop's everyday revenues over four weeks. The weeks will be on the x plane, whereas the weekly profits will be on the y axis. Some common examples of line charts can be the stock market daily price fluctuation, prices of fuels over the last 12 months, the population rate in the country in the last 5 years, temperature rise and fall in a city in the last week, etc. Stated above are a few examples of line chart uses.