Technical Indicator MEGA Reference Part 57 – Typical Price Moving Average

Typical Price Moving Average

The Typical Price Moving Average combines the Pivot Point concept and the Simple Moving Average. The Pivot Point calculation is shown below:

  • Pivot Point = (High + Low + Close) / 3

The calculated Pivot Point number is then inputed into the regular Simple Moving Average equation; rather than the input of the closing price, the Pivot Point calculation is used.

The chart below of the mini-Dow Jones Industrial Average Futures contract shows the slight difference between a 10-day Simple Moving Average and a 10-day Typical Price Moving Average:

The Typical Price attempts to give a more real representation of where price has been by incorporating the high and low price into the most often used closing price. The Typical Price is consequently seen as a more pure Simple Moving Average; nevertheless, as can be referenced by the chart above of the mini-Dow Future, there is not much difference between either Moving Average.

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