Typical Price

The Typical Price indicator is a straightforward price-averaging calculation that produces a single representative value for each candle by adding the high, low, and close prices together and dividing by three. This simple formula — (High + Low + Close) / 3 — captures more information about the period's price range than the closing price alone, giving equal weight to the extremes and the final settlement price. The result is a single line that tracks price more smoothly than a close-only series, reducing the impact of any single price point that might have been an anomaly.

The Typical Price is rarely used as a standalone signal generator; instead, it serves as a foundational building block for other indicators. The Money Flow Index (MFI), the Commodity Channel Index (CCI), and certain pivot point calculations all use the Typical Price as their input. By starting with a more balanced representation of each candle's price range, these derived indicators become more robust and representative of true market value. Traders also use the Typical Price directly as a simple intrabar average to evaluate whether the market closed the period in a position of strength (close near the high, Typical Price elevated) or weakness (close near the low, Typical Price depressed).

For algorithmic crypto traders, the Typical Price is a useful preprocessing step that can improve the quality of any indicator applied downstream. When a bot applies a moving average to the Typical Price rather than just the close, the resulting line is smoother and less reactive to closing-price noise — an important consideration in crypto markets where large wicks and volatile candle closes are common. Using Typical Price as the input for custom calculations also ensures that the bot's analysis accounts for the full price range of each period, providing a more complete picture of market activity than close-only analysis.