What is a Line Chart?
The Line Chart is the most basic type of chart which provides you with the least amount of data for observing a market. It connects one closing price to the next one with a line which represents the general price movement of an asset over a specified period of time. Line Charts can be employed on any time frame.
Interpretation of Line Chart
All it essentially shows is the closing prices of the market depending on which timeframe you have selected. So, if you open a Line Chart on an H1 timeframe over a period of one day, you will see the closing prices of the 24 hours connected with each other. The same methodology is applied for other timeframes. The simplicity of Line Charts can be helpful to determine main trends and quickly gain an overall view of any market.
The Line Chart is very basic and its simplicity is why it is used on countless charts obviously not just in trading. It is the easiest way to show the trend of virtually anything that has data points. Within trading, however, this simplicity is both a positive and a negative. It is a positive for the reasons outlined above. It is a negative because it doesn't show as full a picture as other types of chart. Therefore, it is up to you to decide how much you employ the use of Line Charts as a tool.