Question of the Week: 9/19/2005

Should a logarithmic or arithmetic chart be used for Elliott and NEoWave analysis?


Ideally, all charts should be plotted logarithmically, but many chart services do not provide this option, plus plotting logarithmic charts by hand can be difficult and time-consuming. In the real world, you should save logarithmic plots for wave patterns that cover a large price range. A large price range would be defined by the percentage (%) difference between the highest and lowest price on your chart. If the top price is more than twice the value of the bottom price, a logarithmic chart is best for proper wave counts and accurate channeling. The greater the percentage difference between the top and bottom price level, the greater the importance of employing a logarithmic scale. On the other hand, for day-to-day wave counts and channeling, an arithmetic chart works fine.

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