V.7:12 (431-432): Weekly high/low moving average by Peter Aan

Weekly high/low moving average by Peter Aan

Most moving averages of price are based on the closing price (see "Simple moving average crossover," Stocks & Commodities, June 1989), but the weekly variation computes moving averages of the weekly highs and lows, based on the most recently completed calendar week.

This is a very simple system; you only have to compute the average high and low once a week (Figure 1) and if, for instance, your current position is short, you will be concerned only with the high average.

Both the high and low averages are plotted on a weekly bar chart (Figure 2). When weekly prices cross or "break" through either of the moving average levels, it is a signal to buy or sell (Figure 3). The rules of the system are straightforward:

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