Overview :
The Typical Price indicator is simply an average of each day’s price. The Median Price and Weighted Close are similar indicators.
Interpretation :
The Typical Price indicator provides a simple, single-line plot of the day’s average price. Some investors use the Typical Price rather than the closing price when creating moving average penetration systems.
The Typical Price is a building block of the Money Flow Index.
Example:
The following chart shows the Typical Price indicator on top of Value Line’s bar chart.
1- The Median Price indicator is calculated by adding the high and low price and dividing by two.
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2- 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.
Calculation :
The Typical Price indicator is calculated by adding the high, low, and closing prices together, and then dividing by three. The result is the average, or typical price.
