The typical price moving average combines the pivot point concept and the simple moving average. This guide explains what the typical price is and how to interpret it with the help of an example chart.
What Is the Typical Price Moving Average?
The moving average of typical price attempts to give a more realistic representation of where price has been by incorporating the high and low price into the most often used closing price.
As a result, typical price is seen as a purer simple moving average. Nevertheless, as this chart of the mini-Dow Jones industrial average futures contract illustrates, there is not much difference between either moving average.
The chart shows the slight difference between a 10-day simple moving average and a 10-day typical price moving average.
How the Pivot Point Is Calculated
Pivot Point = (High + Low + Close) / 3
The calculated pivot point number is then inputted into the simple moving average equation. Rather than the input of the closing price, the pivot point calculation is used.
Potential buy and sell signals for the typical price moving average indicator are discussed on the simple moving average indicator page.
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Learn more about technical analysis indicators, concepts, and strategies, including:
For information on the other moving average indicators, you can check out the following pages:
- Adaptive Moving Average
- Exponential Moving Average (EMA)
- Simple Moving Average
- Triangular Moving Average
- Weighted Moving Average (WMA)
For all the basics on how to trade commodities, see our introduction to commodity trading.
Is typical price and pivot point the same thing?
The moving average or typical price is sometimes only referred to as the pivot point indicator because they are one and the same thing.
The pivot point refers to the central price level, or the average high, low, and closing price from the previous day. The result of the pivot point calculation is also called typical price.