Semi-Log Vs. Linear Chart

[fous]

today i was doing som TA on some stocks and i noticed how trend lines are very different when comparing them to a semi-log chart or a linear chart. For short term analysis they didnt seem much different, long term was a whole other story. So, to the point, i drew a long term decending trend line on ARDI(pictured below) with a semi-log scale and it looked like a valid decending trendline with a recent 2-day upside breakout from the trend. Though when i switch the scaling to linear, no such trend line is there with an upside breakout

So my question is, Is long term analysis valid using semi-log scaling when drawing trendlines or any other analysis tools?

Here is 2 charts pictured of the same Stock and same trend line drawn(which was drawn in semi-log scale and then i switched the chart to linear), 1st is semi-log. 2nd is Linear. And im throwing in a 3rd linear chart of a redrawn tendline wich does have the same attributes as the semi-log chart line, as well would have been alot better buying position then if you would have been using the semi-log chart to buy-in at and upside breakout of the descending trendline.

Thanks all,
Fousc

[metro]

The difference in using Log or Linear scaling shows up mostly in stocks that have had wide swings so when you compare them on stocks that trade over long period in tight ranges then there is little difference as the compression does little.

It is good then on volatile stocks to check both and generally use the one that seems more valid. In using your example below you will note the the trend line breaks you "should have" bought had 3 touches. Generally it is better to use a trend line that has more touches that have confirmed it as a valid line. There is a thread on this issue here - do a search before posting to find if the topic already exists

http://www.3stocksonfire.org/trading/index.php?topic=2230.0

This is rather like if one should use EMA or MA - find what works for you - I use log scale and EMA 95% of the time as I am more short term trading but check the others when looking at major trend line breaks.