  We have studied the correlated X-ray spectral and X-ray timing behavior of
the X-ray transient XTE J1806-246 using data obtained with the proportional
counter array onboard the Rossi X-ray Timing Explorer. In the X-ray color-color
diagram two distinct patterns are traced out. The first pattern is a curved
branch, which is observed during the rise and the decay of the outburst. This
pattern resembles the so-called banana branch of those low-luminosity neutron
star low-mass X-ray binaries (LMXBs) which are referred to as atoll sources.
The power spectrum of XTE J1806-246 on this curved branch consisted of a power
law and a cutoff power law component. The presence of these components and
their dependence on position of the source on the branch is also identical to
the behavior of atoll sources on the banana branch. Near the end of it outburst
XTE J1806-246 formed patches in the color-color diagram, the spectrum was
harder, and the power spectrum showed strong band limited noise, characteristic
of the atoll sources in the island state. A second pattern was traced out
during the only observation at the peak of the outburst. It consists of a
structure which we interpret as formed by two distinct branches. This pattern
resembles the normal-flaring branches of the high-luminosity neutron star LMXBs
(the Z sources). The discovery of a 7-14 Hz QPO during this observation
strengthens this similarity. We conclude that if XTE J1806-246 is a neutron
star, it is most likely an atoll source that only at the peak of its outburst
reached a luminosity level sufficiently high to show the type of QPO that Z
sources who on their normal and flaring branches.
