Mark came to meet Antony after his one-month official trip.

Mark: Hi Antony, how are you?

Antony: Hey Mark, I am good. How are you and how was your trip?

Mark: Yeah, the trip was nice.

Antony: I have been eagerly waiting for you to come back.

Mark: Oh really, you missed me so much at work?

Antony: No man, not at work but to continue our discussion.

Mark: Discussion? On what?

Antony: Before you left for your trip, you explained to me the basics of log chart.

Mark: Yes.

Antony: You promised to tell me how to use the log chart for analysis and what the advantages are in our next discussion.

Mark: Of course, I remember, Antony. If you have time, then we can talk right away.

Antony: Sure, we can.

Mark: So, let’s go for a coffee and as we walk, brief me on what you recollect from our previous conversation (https://www.thehindubusinessline.com/portfolio/personal-finance/simply-put-logging-the-absolute-chart/article70955424.ece)

Antony: Yeah, why not? A log chart captures the percentage movement between two points rather than the absolute values. It normalises abnormal price swings and can be used for analysing long-term historical price data.

Mark: Perfect

Antony: Now, tell me how can I use the log chart for my analysis?

Mark: As I told you earlier, log chart works well on very long historical data, say 30-40 years or even more. So, you have to use at least the monthly price data and should not go below that.

Antony: Meaning?

Mark: That is, you use daily, weekly charts etc for analysis, right?

Antony: Yes.

Mark: Always remember that when you are using log chart, it is ideal to have monthly chart as the lowest time frame. You can use quarterly or even yearly data/charts, when your historical data runs to say 50-100 years or so.

Antony: I can do analysis on the quarterly, yearly etc in an absolute price chart itself. So, what is unique about using a log chart for long-term analysis?

Mark: Log chart can give you support and resistance at crucial junctures, which will not be available in an absolute price chart.

Antony: Is it?

Mark: Yes. Not all the time, but sometimes.

Antony: Can you give me an example?

Mark: Why not? Open your laptop and pull out the Sensex chart.

Antony: Give me a minute

Mark: Take your time, I will get you a coffee.

Antony: Yes please.

Mark: Here is your coffee, Antony. Have you got the Sensex chart?

Antony: Yeah.

Mark: See the quarterly (three-month) candle chart for, say, 1980.

Antony: What 1980? But Sensex was launched in 1986.

Mark: The official launch was in 1986. But the base is taken as 100 on April 1979. So, the retroactive data since then is available.

Antony: Oh ok. I have got the chart from 1980.

Mark: Now, take the low of the second quarter (April-June) candle of 1983, connect it with the low of the second quarter of 1988 and draw a trendline. Tell me what you observe.

Antony: Yes, this trendline has given support before the rally in 2003 and 2020.

Mark: Correct. But it is important to note here that the support that was given in 2020 is during the Covid-19 market crash.

Antony: Yes, the trendline touches the first quarter (January-March) low of 2020.

Mark: Exactly. So, if you had used a log chart then after seeing the bounce in the second quarter of 2020, you would have been convinced to enter the market rather than sitting with panic.

Antony: Absolutely.

Mark: So, this is the major advantage of using a log chart. Look at the recent move from 2024 in Sensex on the monthly chart. On the log chart, you will get a trendline support 71,700 by connecting the January and June 2024 lows.

See where you get the support on the absolute chart for the same trendline.

Antony: Let me draw the trendline and see. Oh, it is coming lower.

Mark: Where?

Antony: Around 71,100.

Mark: You are correct. So, if the market falls more from here, then these two are the levels that one has to keep an eye on.

Antony: Yeah, I will watch those levels closely.

Mark: Antony, let me finish this conversation on a cautious note. Whatever we have discussed here are just to make you understand the concept of log charts. Do not take it as a specific recommendation.

Antony: Not at all. I will now go and study more log charts and compare it with the absolute charts.

Mark: Yes. Only then you will understand more on how the chart works and will get a clear idea.

Published on June 13, 2026