What a Difference II - Log vs Linear?
posted Jul 29, 2004 at 09:38PM
I don't know why but this issue on log vs linear scale is getting a little under my skin. The whole point of TA is to try to capture an objective look of what the market is doing and what state it is in...Interpretation is always a bit dicey but at the least you have to trust what you see.
Anyways just a few charts to see how things change between the two pricing scales.
Head & Shoulders
Looking at these charts and the ones put up yesterday we can maybe put a few generalities together.
If the "line"...trend..price support is a horizontal one then log vs linear is not a factor.
Symmetrical triangles are OK in either scale as well, perhaps becasue we have two opposing trend lines. ( Inever play expanding triangles myself)
I have little doubt that patterns that incorporate one horizontal line are OK as well (descending, ascending triangles)
The big differences between the two come about when a single trendline is drawn...slanted H&S and inverse H&S...and I would imagine patterns like bump and run etc.
I don't know which scale is more appropriate..but we can mitigate by paying attention to moving averages. Enough perhaps is just to know that there is a difference.