What it means
A daily chart shows a bar for each trading day, which can be busy and jumpy. A weekly chart combines five trading days into one bar, so it shows far fewer data points over the same stretch of time.
A year of price history appears as roughly 52 bars rather than around 250. Each weekly bar contains four numbers.
The open is the first price of the week, the high and low are the extremes reached during the week, and the close is the last price of the week. A candlestick version colours the body according to whether the close was above or below the open, so the direction of the week is easy to see.
The main benefit is perspective. A sharp fall over two days may look alarming on a daily chart but appear as a small step on a weekly one.
Longer-term investors use weekly charts to identify trends, support levels (prices where buyers have tended to step in) and resistance levels (prices where sellers have tended to appear). Many analysts use several time frames together.
They start with the weekly chart to understand the broad direction, then look at the daily chart for timing. A signal that appears on both charts is usually given more weight than one that appears only on a daily chart.
There are limits to bear in mind. Because each bar is a week, a weekly chart reacts slowly and can hide sharp moves within the week.
It is also a description of what has happened, not a forecast, and it should be used alongside company and economic information. Weekly charts are also available for things other than shares, such as currencies, commodities, bond yields and market indexes.
A finance team tracking the exchange rate that affects its supplier invoices can use one to see whether a move is part of a lasting trend. That helps in deciding when to fix a rate with the bank.
In practice
Real-world examples.
Example
A long-term investor wants to know whether a share is in an uptrend. She opens the weekly chart and sees higher lows over the last year. She decides to keep her holding and ignores a bad day, since the weekly trend is still intact.
Example
A currency trader looks at the weekly chart of the euro against the dollar to find a level where the price has turned several times. He marks it as resistance. He then uses the daily chart to pick an entry point.
Example
A finance director monitoring the share price of a company she plans to acquire looks at its weekly chart over three years. She sees the price has stayed between $30 and $45 for two years. She uses this range as context when she prepares an offer.
Formula
Calculation
Weekly range = Weekly high - Weekly low
Weekly return = (This week's close - Last week's close) / Last week's close x 100
Suppose a share closed last week at $48. This week it opened at $49, reached a high of $53, fell to a low of $47 and closed at $52. The weekly range is 53 - 47 = $6. The weekly return is (52 - 48) / 48 x 100 = 4 / 48 x 100 = 8.33%. The close was above the open, so a candlestick for this week would be coloured to show a rising week.Case study
Seen in the real world.
Whitmore Pension Trust is an illustrative, fictional fund that reviews its largest holdings every month. An analyst noticed that a manufacturing share looked alarming on the daily chart after three weak days.
On the weekly chart the same fall appeared as one modest red bar within a rising trend of eight months. The trustees decided not to sell and asked for a review of the company's order book instead.
In this illustrative story the order book was healthy and the price recovered within a month. The lesson is that the time frame you choose changes the story, and weekly charts help long-term investors avoid reacting to short-lived moves.
Watch out
Common mistakes.
- Using a weekly chart for short-term trading decisions, when it responds slowly and may hide important moves inside the week.
- Treating a pattern on a weekly chart as a forecast, when it only describes past price behaviour.
- Looking at only one time frame, instead of checking weekly, daily and monthly charts for agreement.
Questions
People also ask.
What does a weekly candlestick show?
It shows the week's open, high, low and close, with the body coloured according to whether the close was above or below the open.
How many bars are in a year of weekly data?
There are about 52, because there is one bar for each week of the year.
Are weekly charts better than daily charts?
Neither is better in all cases, as weekly charts show the broad trend while daily charts help with timing, so many investors use both.
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