Forex Chart Type : Line
Before you begin to study further technical analysis, you must first know that there are three types of charts that are known. These three types of graphs will be analyzed technically. Choose the type of chart according to your comfort, needs and abilities. This article will discuss the line chart type or Line Chart.
The line graph is the most basic and simplest type of graph used in technical analysis. The line graph is also called a close-only chart because it only plots the closing price of the pair or stock, with lines connecting the points formed by the closing price.
In the line graph, the close price data for the pair or stock is plotted on the graph with time drawn from left to right along the horizontal axis, or x axis and the price level plotted from the bottom up along the vertical axis, or y axis. Price data used in the line graph is usually the closing price of the pair or stock. The simplicity of the line graph is its greatest strength because it provides a clean and recognizable visual appearance of price movements. This makes it an ideal tool to use in identifying the dominant / valid support and resistance levels, trend lines, and certain graphical patterns / formations.
However, the line graph shows no ups and downs (fluctuations at a time) and therefore, the line graph does not show the price range for that session / period. Nevertheless, the line graph is a charting (visualization) technique favored by Charles Dow who is only interested in the level at which prices are closed. This, according to Dow, is the most important price data of a session or trading period because it determines the gain or loss of the unrealized period.
Line graphs or close-only charts are still favored by many traders who agree that closing prices are the most important and unconcerned data for noise resulting from price fluctuations and small price movements, or speculation that characterizes the start of trading sessions.