Typical Price¶
| Name | Type | Prerequisite | Use Cases |
|---|---|---|---|
| Typical Price (TP) | Trend/Benchmark | OHLC Data | Serves as the base input for more complex indicators like CCI and VWAP. |
Definition¶
Typical Price is an average of the High, Low, and Close prices for a given period. It provides a simple, single-value representation of the price action for each bar and is often used as an input for other indicators (like CCI and VWAP) instead of just the Close price.
Mathematical Equation¶
\[
\text{Typical Price} = \frac{\text{High} + \text{Low} + \text{Close}}{3}
\]
Special cases¶
- Maximum possible value: Unbounded
- Minimum possible value: 0
- Behavior: Follows the price, representing the average of high, low, and close.
Visualization¶
Trading Significance¶
-
Pivot Point: It acts as a rudimentary pivot point for the day/bar.
-
Filter: Trading above the typical price can be seen as bullish, while trading below it can be seen as bearish.