Closing price definition
A closing price is a market’s final price level before it closes for the day. A market’s closing price is used as the price level shown on a typical line chart.
Closing prices are the benchmark used to measure a market’s daily performance. A market’s price can fluctuate during the day, but a close price is a fixed number that can not only be compared with previous close prices, but also compared with close prices of other markets.
Why is closing price important?
Closing prices are important as they used as the benchmark to identify price trends and evaluate a market’s performance over a set period.
By taking away the open price from the close price, you can calculate exactly how much a market has risen or fallen in a day. This can be valuable in identifying market sentiment and predicting price trends.
For line charts, the close price is the only information shown – in contrast to candlestick and bar charts that also show open, high, and low prices for the day. Therefore, closing prices are the only information used to show trends and highlight whether the market is bearish or bullish.