Weekly candle
How does one candle summarise a whole week of trading, and what does that summary hide?
In plain words
A weekly candle condenses seven days of prices into four numbers: the price when the week began (open), the lowest price (low), the highest price (high), and the price when it ended (close). Everything between those four points is discarded.
Why it matters
Traders scan many markets at once, so a single four-price summary is a fast filter. But the candle shows only where the week started and finished relative to its extremes; it does not show the path, the size of the day-to-day swings, or when the extremes occurred.
In a real week: ETH, week of 2 April 2018
ETH opened the week of 2018-04-02 at 378.58 and closed at 400.40, a 5.76% gain. Its high was 419.08 on Tuesday at 19:00 UTC and its low was 362.54 on Friday at 10:00 UTC, a 15.6% range. The close sat at 67.0% of that range. Yet the week contained a best day of 7.79% and a worst day of -8.88%, with an annualised realised volatility of 86.0%.
A common mistake
Reading a positive weekly candle as a calm or straightforwardly bullish week. A green close can hide sharp reversals inside the week, and a small body can conceal a very wide range.