We've focused so far on the daily bar chart. However, be aware that a bar chart can be constructed for any time period. The intra­day bar chart measures the high, low, and last prices for periods as short as five minutes. The average daily bar chart covers from six to nine months of price action. For longer range trend analysis, however, weekly and monthly bar charts must be used. The value of using these longer range charts is covered in Chapter 8. But the method of constructing and updating the charts is essentially the same. (See Figures 3.9 and 3.10.)
On the weekly chart, one bar represents the price activity for the entire week. On the monthly chart, each bar shows the entire month's price action. Obviously, weekly and monthly charts compress the price action to allow for much longer range trend analysis. A weekly chart can go back as much as five years and a monthly chart up to 20 years. It's a simple technique that helps the chartist study the markets from a longer range perspective—a valu­able perspective that is often lost by relying solely on daily charts.