Hi all,
I can't remember where I read it recently, but it said something like "most technical analysists use log scale charts". So I started to pay attention and it seems like hardly anyone uses log (semi log) charts, but there are a few. Do you guys have a standard situation where you use them, or do you use both, and what are the advantages or disadvantages?
So mucking around I quickly discovered that it makes almost no difference on the smaller timeframes for most stocks, and really only seems to make a difference when viewing a long period of time where the stock has moved significantly. And what a difference it can make! For example, below are a standard linear chart and a log scale for 5GN, which has moved quite a lot over the last 12 months. So for trend lines for example, on the linear scale chart the price rise looks like an ascending broadening wedge, while on the log scale chart it looks more like a nicely behaved rising channel. And breakout levels based on trend lines suddenly change- descending triangles turn in to broken channels- the world goes crazy! (crazier)
I'm not just interested in how I can use the two types to interpret things, but also want to understand what the majority of the rest of the market (who read charts etc
) see when they are looking at the market.
Thanks guys and gals
(20min delay)