What does a weekly candle show?

A weekly candle sums up five daily candles, or four in a holiday week. Its open is the first trade of the week, usually Monday’s open; its close is the last, usually Friday’s close; its high and low are the week’s extremes, whichever day they came on. A monthly candle does the same for every trading day of the month.

Hypothetical, as in the drawing at the top: a stock opens Monday at $100.00, dips to $97.00 on Tuesday, peaks at $106.00 on Thursday and closes Friday at $104.00. The weekly candle is one green bar: open $100.00, high $106.00, low $97.00, close $104.00. The Tuesday scare survives only as a lower wick.

That compression is the point. Two years of weekly candles take about 104 bars, roughly the space five months of daily candles need. On TradingView, switch the interval to 1W or 1M; the chart timeframes guide covers how every interval is built.

The 10-week and 40-week moving averages

Two averages do most of the work on a weekly chart. Ten weeks hold about 50 trading days and forty weeks about 200, so the 10-week and 40-week moving averages are approximately the weekly versions of the 50-day and 200-day. They are not identical: a weekly average uses one close per week, so it moves more slowly and ignores midweek swings.

Read the slope first, then where price sits. Price above a rising 40-week average describes a long-term uptrend; price below a falling one, a long-term downtrend; a flat average that price keeps crossing, a range. The 10-week shows the intermediate trend, and in a steady advance pullbacks may hold near it. Stan Weinstein’s stage analysis uses a 30-week average the same way, and the moving averages guide covers simple versus exponential. On TradingView, add two simple moving averages, lengths 10 and 40, to a 1W chart.

Turn your phone sideways to read the drawing. Tap to close.

A hand-drawn weekly chart: a flat base, then an uptrend of higher highs and higher lows. An orange 10-week moving average follows price closely, labeled 10-week ≈ 50-day, and a blue 40-week average rises more slowly underneath, labeled 40-week ≈ 200-day. Two pullbacks near the 10-week line are circled, noted pullbacks near the 10-week. The title reads price above a rising 40-week average: long-term uptrend.

Weekly support and resistance

Levels on a weekly chart come from months or years of trading, and anyone who zooms out can see them, so they tend to matter more than levels from a few days of daily candles. A weekly close beyond a weekly level says more than an intraday poke through it.

Hypothetical: a stock has turned down from about $80 three times in two years. On Wednesday it trades up to $81.50 and the daily chart looks like a breakout. By Friday it has slipped back, and the weekly candle closes at $78.40, under $80, with a long upper wick. Until a week closes above $80, the level is still resistance. The support and resistance guide shows how to draw levels as zones.

How to use the weekly chart to avoid a long-term downtrend

The most useful job of the weekly chart is saying no. A breakout on the daily chart can be nothing more than a bounce inside a weekly downtrend: a lower high under a falling 40-week average.

Hypothetical, in the drawing: a stock has fallen from $120 to $60, with a lower high at $88 on the way down. On the daily chart it rallies from $60 to $72 and closes above a small range at $70, which looks like a buy. On the weekly chart, the same rally is a bounce of a few candles, still well under the falling 40-week average. The long-term trend has not changed. Many investors wait for the 40-week average to flatten and for a higher low before buying, the shift stage analysis calls the move from stage 1 to stage 2.

For individual stocks, as in growth investing, the weekly trend is a useful filter before you study the business. For a long-term investor adding money to a broad fund on a schedule, it is context rather than a trigger; index fund investing and dollar-cost averaging do not depend on timing it.

Turn your phone sideways to read the drawing. Tap to close.

Two hand-drawn panels. Left, the weekly chart: a decline from about 120 to 60 under a falling blue 40-week average, with a lower high marked at 88, then a short bounce in the last five candles, shaded yellow and noted the weekly says: a bounce inside a downtrend. Dashed zoom lines lead from that box to the right panel, the daily chart, where the same bounce climbs from about 60 to 72 and closes above a small range at 70 with a green buy triangle, noted looks like a breakout.

Log scale for long price histories

Over many years, a linear price scale distorts the picture: a move from $10 to $20 looks tiny next to a move from $80 to $160, though both doubled the price. A logarithmic (log) scale spaces prices by percentage, so every doubling takes the same height, as the right panel of the drawing shows. Use it on monthly charts and long weekly charts; on TradingView, click log at the bottom right of the chart. Trend lines do not carry over from one scale to the other, so draw them on the scale you actually use.

Turn your phone sideways to read the drawing. Tap to close.

Two hand-drawn panels of the same price line, doubling four times from 10 to 160. Left, a linear scale from 0 to 160: the early doublings hug the bottom and the last one shoots up, with a tiny ×2 bracket at the start and a tall ×2 bracket at the end, noted the early doublings look flat. Right, a log scale with 10, 20, 40, 80 and 160 equally spaced: the line is nearly straight, with four equal ×2 brackets beside it, noted each doubling takes the same height.

Limits of weekly and monthly charts

Slow charts pay for their calm with lag and distance:

  • Late signals: a weekly close above resistance arrives at the end of the week, often well above the level, and the 40-week average turns long after a top or bottom.
  • Wide stops: a stop below a weekly swing low can sit 15% or more below the entry, so the position must be small for the same risk; the position size calculator does the math.
  • Hidden gaps: a weekly candle hides the gaps inside the week, and earnings can move a stock far past a weekly stop.
  • Few signals: a monthly chart may offer only a handful of clear signals in a year. It is a map, not an entry tool; time entries on the daily chart, as in multi-timeframe analysis.