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 20 and 40 is the same height as the price range between 40 and 80. The resistance line drawn on this chart shows the real value of this scaling.
Monthly chart, semi-log scaling chart of Apple Computer.
Chart created using Personal Hotline from Trendsetter Software.
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