Below you will find a line chart, and we will show you how to connect the closing prices of a share. In our experience line charts are not that great to draw precise trend lines or to find exact support and resistance zones.
Let us show you why line charts are only good to glance and not good for connecting prices and why they can be very deceptive.
Here is a quick example to show you the difference between a line chart and an Open High Low Close (OHLC) chart.
If you carefully look at the line chart above and compare it with the OHLC (Open High Low Close) chart below, you can tell that the trend lines drawn are not in the same spot. This could make a difference to your overall profit or loss.
In the OHLC chart below, the black line represents the line drawn using a line chart. The red line represents the same trend line drawn using an OHLC chart.
Some of you might think there is not much difference, but let us tell you if you are a day trader it does make a world of a difference.