Semi-Log Scaling

Many analysts believe long term trends lose validity on arithmetic (standard) charts and, therefore prefer semi-log scaling for weekly and/or monthly charts. On an arithmetic chart, each inch equates to the same number of points. Conversely, on a semi-log chart, the scaling halves as price doubles. In the example below, the region occupied by prices ranging between 70 and 80 is the same height as the price range between 100 and 120 which is the same height as the price range between 160 and 200. The resistance line drawn on this chart shows the real value of this scaling when you compare it to the standard arithmetic chart shown below.


Monthly semi-log chart of IBM semi-log chart Monthly standard arithmetic chart of IBM arithmetic chart

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