What Is a Weekly Chart?
Let me explain to you what a weekly chart is—it's essentially the data series showing price actions for a traded security. On this chart, each candle, bar, or point in a line stands for the price summary of a full week of trading. You'll commonly see candlestick charts and bar charts used by traders and investors like yourself.
When you set a chart to a weekly time frame, it displays the high, low, open, and close for that entire week, but it skips the day-by-day movements within it. You can compare these weekly charts directly with daily charts to get different perspectives.
Key Takeaways
Weekly charts summarize the essential data points from all daily trading sessions in a week, giving you a clear overview. This timeframe is typically linked to longer-term forecasting and analysis, which is crucial if you're planning ahead. Plus, these charts can comfortably show one to two years of data on your screen, making it straightforward for you as an analyst or investor to spot the long-term trend of a security.
Understanding Weekly Charts
As a technical analyst, you use weekly charts to assess the long-term trend of an asset. The look of the chart can change based on the type you choose—for instance, a weekly line chart might just show the closing price each week, while a candlestick version displays the open, high, low, and close.
This setup provides a long-term view because it packs in more historical price data than a daily chart over the same period. You can add weekly charts to your display and compare them with daily and volume charts for better insights.
These charts pull together data from all five trading days in a week. The highest and lowest prices from those sessions become the weekly high and low, no matter which day they occurred on.
Take a look at this example: it illustrates how daily data for the week gets condensed into one candle. The final weekly candle doesn't resemble any single daily one; it's just a net of the week's action into a small body with a wide range. But if you're reviewing weekly charts, that's exactly the level of detail you need.
Advantages of Weekly Charts
Weekly charts give you a broader view of security price trends compared to the minute details in daily or intraday charts. With just 52 candles or bars representing a year, any trends or patterns you see suggest forecasts that could last a month or more. Institutional analysts, who seek longer-term opportunities, find weekly charts more relevant than short-term traders do.
You can use weekly charts alongside daily ones to confirm trends and buy/sell signals. Like daily charts, they help identify price channels with bullish or bearish trends. Because they cover longer periods, some indicators might differ from daily charts or reinforce patterns you see there.
If you're a less active investor, weekly charts are useful for tracking long-term trends in your securities. Many investors check these charts regularly to watch for shifts in trends or signs that an investment might be heading into a downtrend.
Special Considerations
You might also want to follow monthly charts for an even wider view, as they plot prices monthly. In any case, overlaying a price chart with a moving average can be helpful. Technical traders watch moving averages closely, no matter the timeframe. For longer-term investors, moving averages and envelope channels are valuable tools when viewing weekly or monthly charts of your investments.
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