The weighted close study is another way of viewing the price data. It places a greater emphasis on the closing price rather than the high or low. This process creates a single line chart.

Unfortunately, the study does not have clear cut trading signals. You must use traditional chart techniques, such as trendlines, support and resistance, chart formations, and related technical analysis procedures. If you want a clear and concise picture of the market, this study produces such a picture. Trendlines are sometimes more visible as well as chart formations. The clutter of the bar chart is removed.

Computation

The formula for the weighted close is:

WTCLt = (Hight + Lowt + (2 * Closet)) / 4

• WTCLt is the weighted close value for the current period.
• Hight is the high price for the trading interval.
• Lowt is the low price for the trading interval.
• Closet is the closing price for the trading interval.

Using real world values, the equation becomes:

THE TOP = ( 7390 + 7360 + ( 2 * 7375) ) / 4

= 29500 / 4

= 7375