Average Price Indicator
The Simple Midpoint That Captures Intraday Price Equilibrium
The Average Price Indicator – sometimes just called Average Price or plotted as a line on charts – is one of the most straightforward tools in technical analysis. It takes the three key intraday price points (high, low, close) and averages them into a single value per period. The result? A clean, balanced 'center of gravity' for price action that smooths out noise and highlights where the market found its temporary equilibrium. It's the quiet workhorse behind many advanced indicators and a handy reference for spotting short-term bias or mean reversion zones.
The Dead-Simple Formula
Nothing fancy:
Average Price = \frac{High + Low + Close}{3}
Also known as Typical Price (TP) – the same thing.
Each bar gets one balanced value representing the day's 'center'.
What It Really Tells You
Interpretation basics:
- Price > Average Price: Close in upper half of range – mild bullish bias.
- Price < Average Price: Close in lower half – mild bearish bias.
- Price hugging Average Price: Balanced trading – equilibrium or consolidation.
- Average Price rising: Overall intraday centers shifting higher – building strength.
- Average Price falling: Centers dropping – underlying weakness.
It's a soft pivot – not strong S/R, but a fair reference for short-term sentiment.
Pro Trading Applications
Where it shines:
- Mean reversion reference: Price far from rising Average Price → potential pullback zone.
- Confirmation tool: Momentum signal + price above Average Price → higher conviction.
- Institutional benchmark: Compare execution vs daily Average Price series.
- Building block: Core input for VWAP, MFI, Chaikin Money Flow, and others.
Plot as a line – watch how price interacts with its own rolling center.
Common Pairings
Boost it with:
- Volume indicators: MFI/Chaikin use Average Price as base.
- Oscillators (RSI/MACD): Signals when price extended from Average Price.
- Trend tools: Price > rising Average Price + above MA → strong bullish alignment.
- VWAP/Bollinger: Average Price as neutral pivot in intraday context.
Strengths and Natural Limits
The Wins
- Perfectly balanced intraday snapshot – ignores close bias.
- Zero lag per bar – instant equilibrium read.
- Foundation for many advanced volume-weighted tools.
- Simple reference for short-term bias and reversion.
The Gotchas
- Lagging when plotted over periods – backward-looking average.
- No directional power alone – needs trend/momentum context.
- Not volatility-adjusted – extreme ranges dominate.
- Soft levels – rarely strong S/R by itself.
Your Average Price Quick-Start
- Plot as single line on any timeframe.
- Watch price interaction – above/below for bias.
- Use as pivot for short-term mean reversion.
- Feed into MFI/Chaikin for volume-weighted power.
- Combine with trend filter for actionable signals.
- Great intraday benchmark for execution quality.
Key Takeaways
Average Price = (H+L+C)/3 – the balanced intraday center point.
Price above = mild bullish bias, below = bearish; line direction shows shift.
Perfect neutral reference and building block for advanced indicators.
Simple but insightful – highlights equilibrium and short-term sentiment.
Pair with volume, trend, and momentum tools – and Average Price becomes your fair-value anchor. Stay centered and trade smart!
Average Price Indicator
The Simple Midpoint That Captures Intraday Price Equilibrium
The Average Price Indicator – sometimes just called Average Price or plotted as a line on charts – is one of the most straightforward tools in technical analysis. It takes the three key intraday price points (high, low, close) and averages them into a single value per period. The result? A clean, balanced 'center of gravity' for price action that smooths out noise and highlights where the market found its temporary equilibrium. It's the quiet workhorse behind many advanced indicators and a handy reference for spotting short-term bias or mean reversion zones.
Table of Contents
The Dead-Simple Formula
Nothing fancy:
Average Price = \frac{High + Low + Close}{3}
Also known as Typical Price (TP) – the same thing.
Each bar gets one balanced value representing the day's 'center'.
What It Really Tells You
Interpretation basics:
- Price > Average Price: Close in upper half of range – mild bullish bias.
- Price < Average Price: Close in lower half – mild bearish bias.
- Price hugging Average Price: Balanced trading – equilibrium or consolidation.
- Average Price rising: Overall intraday centers shifting higher – building strength.
- Average Price falling: Centers dropping – underlying weakness.
It's a soft pivot – not strong S/R, but a fair reference for short-term sentiment.
Pro Trading Applications
Where it shines:
- Mean reversion reference: Price far from rising Average Price → potential pullback zone.
- Confirmation tool: Momentum signal + price above Average Price → higher conviction.
- Institutional benchmark: Compare execution vs daily Average Price series.
- Building block: Core input for VWAP, MFI, Chaikin Money Flow, and others.
Plot as a line – watch how price interacts with its own rolling center.
Common Pairings
Boost it with:
- Volume indicators: MFI/Chaikin use Average Price as base.
- Oscillators (RSI/MACD): Signals when price extended from Average Price.
- Trend tools: Price > rising Average Price + above MA → strong bullish alignment.
- VWAP/Bollinger: Average Price as neutral pivot in intraday context.
Strengths and Natural Limits
The Wins
- Perfectly balanced intraday snapshot – ignores close bias.
- Zero lag per bar – instant equilibrium read.
- Foundation for many advanced volume-weighted tools.
- Simple reference for short-term bias and reversion.
The Gotchas
- Lagging when plotted over periods – backward-looking average.
- No directional power alone – needs trend/momentum context.
- Not volatility-adjusted – extreme ranges dominate.
- Soft levels – rarely strong S/R by itself.
Your Average Price Quick-Start
- Plot as single line on any timeframe.
- Watch price interaction – above/below for bias.
- Use as pivot for short-term mean reversion.
- Feed into MFI/Chaikin for volume-weighted power.
- Combine with trend filter for actionable signals.
- Great intraday benchmark for execution quality.
Key Takeaways
Average Price = (H+L+C)/3 – the balanced intraday center point.
Price above = mild bullish bias, below = bearish; line direction shows shift.
Perfect neutral reference and building block for advanced indicators.
Simple but insightful – highlights equilibrium and short-term sentiment.
Pair with volume, trend, and momentum tools – and Average Price becomes your fair-value anchor. Stay centered and trade smart!
Related Terms
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