Trading Trendline Breaks (Part 1) by Sylvain Vervoot
One of the best trading methods in technical analysis is the
application of trendline breaks. Find out why.
am convinced that one of the best trading methods
using technical analysis is the application of
trendline breaks. Let me convince you too. Letís
start off by discussing the differences and similarities of linear and logarithmic scaling. First of all, take a look
at your charts. Are they linear both horizontally for the time
setting and vertically for the price setting? Or do you have to use
a semilogarithmic scale with a linear scaling on the time
axis and a logarithmic scaling on the price axis?
Linear scaling: If you are using a division of five points on
the linear scaling, then for a price change from $25 to $50
there are five divisions. For a price change from $50 to $100
there are 10 divisions. This means that the distance on the
vertical axis from $50 to $100 is twice as large as the one
from $25 to $50 (Figure 1).