Enhance your data analysis skills by mastering trend lines, including Linear, Exponential, Linear Forecast, and Moving Average types. Learn to effectively visualize data trends and anticipate future patterns using Excel charts.
Key Insights
- Linear trend lines create a straight best-fit line through data points, effectively displaying the general upward or downward direction in linear data sets.
- Exponential trend lines produce a curved projection suited for data that increases or decreases at a continually growing rate, clearly illustrating rapid changes.
- Linear forecast trend lines extend linear projections beyond existing data points, enabling accurate predictions of future trends, while Moving Average trend lines smooth data fluctuations by averaging multiple data points.
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Trend lines. Trend lines are used to show the prevailing direction of data. There are four main types of trend lines we're going to take a look at in this section.
They are linear, exponential, linear forecast, and moving average. Linear creates a best-fit straight line for linear datasets. This creates a line that shows where the data is trending—either up or down—but it's a straight line.
Exponential creates a curved line that is useful for data that rises or falls at constantly increasing rates. This line will look more like a curve and less like a line. Linear forecast creates a linear trendline that forecasts into the future.
So beyond the existing data, you'll start to get a sense of where the data is going to go—where the data is trending in the future. Moving average creates a line by averaging a specific number of data points. The default is two.
So let's now take a look at a linear trendline in exercise one. Using the chart below, I want to apply a linear trendline to the data. So the first step is to click inside the chart.
When we click inside the chart, we'll head over to Chart Design. The tab will show up as soon as you click inside the chart. It won't be there until you do.
So make sure to click inside the chart, preferably in the background. I'll click Chart Design. Then I'll head over to the left and choose Add Chart Element because I do want to add an element to this chart that is not already there, and that is going to be Trendline.
When I go to Trendline, here are the four main options. I'll choose Linear. When I click outside of the chart and I get a view of the chart, I can see I have a straight linear line that shows the data, and the line is sort of like threading the needle between the points.
So it's doing its best job to fit within the points in this scatter chart, which is what this type of chart is called. Now let's take a look at creating an exponential trendline. I'm going to scroll down a little further down the sheet, and I'm going to click in the chart.
Then I'll head over to Chart Design, or I can click on the plus sign. I can access the chart elements from here as well. This is sort of like a mini toolbar for the chart.
I'll head over to Trendline. It's defaulting to Linear. That's not what I want, so I'll click the triangle, and I'll choose Exponential.
And now we have that curved line that is connecting the dots in the scatter chart and gives us a sense of how the data is either rising or falling. In this case, it's rising. In this section, we covered how to work with the Trendline element, adding that to the chart.
