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Technical Analysis

Technical Analysis

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Published by acharyadas

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Published by: acharyadas on Feb 13, 2008
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12/04/2013

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Overview

The Weighted Close indicator is simply an average of each day's price. It gets its name
from the fact that extra weight is given to the closing price. The Median Price and
Typical Price are similar indicators.

Interpretation

When plotting and back-testing moving averages, indicators, trendlines, etc, some
investors like the simplicity that a line chart offers. However, line charts that only show
the closing price can be misleading since they ignore the high and low price. A Weighted
Close chart combines the simplicity of the line chart with the scope of a bar chart, by
plotting a single point for each day that includes the high, low, and closing price.

Example

The following chart shows the Weighted Close plotted on top of a normal high/low/close
bar chart of Peoplesoft.

Technical Analysis from A to Z
by Steven B. Achelis

Calculation

The Weighted Close indicator is calculated by multiplying the close by two, adding the
high and the low to this product, and dividing by four. The result is the average price with
extra weight given to the closing price.

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