Weekly Chart Definition Uses Advantages Vs Daily or Monthly

Weekly Chart: Definition, Uses, Advantages, Vs. Daily or Monthly

What Is a Weekly Chart?

A weekly chart is a data series of price actions for a traded security. Each candle, bar, or point on a line represents the price summary for a single week of trading. Candlestick charts and bar charts are the most common types used by traders and investors.

A weekly chart, set to display in a weekly time frame, shows the high, low, open, and close for the entire week but not the day-by-day trading movements.

Weekly charts can be compared with daily charts.

Key Takeaways

– Weekly charts summarize the data for all the daily trading sessions that week.

– This time frame is usually associated with longer-term forecasting and analysis.

– Weekly charts comfortably display one to two years of data on the screen, making them a convenient way for analysts and investors to see the long-term trend of a security.

Understanding Weekly Charts

Technical analysts use weekly charts to gauge the long-term trend of a given asset. The appearance of a weekly chart varies depending on the chosen chart type.

For example, a weekly line chart may only include the weekly closing price, while a weekly candlestick chart displays the open, high, low, and close for the week. This chart construction gives a long-term view of the security by including more historical price movement than an equivalent period day chart. Weekly charts can be added to a trader’s display and used in comparison to daily charts and volume charts.

Weekly charts summarize data from all days of the week. The highest and lowest prices in those five trading sessions become the high and low for the weekly marker.

Advantages of Weekly Charts

Weekly charts help traders view security price trends from a broader perspective than daily or intraday charts. Since a weekly chart can show a year’s worth of trading in only 52 candles or bars, the trends or patterns they form imply that any forecast from them will likely last a month or several months. Institutional analysts prefer longer-term opportunities, making weekly charts more relevant to them.

Weekly charts can be used with daily charts to confirm price trends and buy/sell signals. They can identify price channels with bullish and bearish trends. Some indicators may differ from daily price charts or help confirm daily price chart pattern inferences.

Weekly charts are also useful for less active investors to identify long-term price trends in the securities they follow. Investors may view weekly charts to watch for changes in long-term trends or signals that the investment may be potentially beginning a downtrend.

Special Considerations

All types of investors may also follow monthly charts, which provide an even broader view of a security since prices are charted monthly. Overlaying a price chart with a moving average of prices can be helpful in all instances. Moving average studies are closely followed by technical traders regardless of the time frame they trade. Moving average and moving average envelope channels can also be useful for longer-term investors who wish to follow their investment’s price in a weekly or monthly chart.