ATR Technical Analysis & ATR Trade Signals

Developed by J. Welles Wilder

This indicator is a measure of volatility - it measures the range of price movement for a particular stock price period. The ATR is a directionless indicator and it does not determine/figure out the direction of the market price trend.

Average True Range (ATR) Indicator - Indices ATR Indicator Analysis

High ATR indicator values

High Average True Range indicator values indicated market bottom after a sell off.

Low ATR values/readings

Low Average True Range values showed extended periods of sideways trading price movement - Price Range/Range-Bound Market, such as those found at market tops and consolidation periods. Low ATR indicator values/readings are typical for the periods of sideways range-bound movement of long duration which happens at the top of the market and during consolidation.

Calculation

This trading indicator is calculated using the following:

Difference between the current high and the current low

Difference between the prior closing price & the current high

Difference between the prior closing price & the current low

The final Average is calculated by adding these values and calculating the average.

Technical Analysis and How to Generate Signals

ATR indicator can be analyzed using the same principles as other volatility trading indicators.

Possible trend reversal signal - The higher the value of the trading indicator, the higher the probability of a trend change;

Estimate of the trend force - The lower the trading indicator's value, the weaker the market trend movement.

Average True Range (ATR)- Sell & Buy Trading Signals - Index ATR Indicator Analysis

Technical Analysis in Indices Trade

More Lessons and Tutorials and Courses:

Trade Stock Indices

ATR Technical Analysis & ATR Trade Signals

High ATR indicator values

Low ATR values/readings

Technical Analysis and How to Generate Signals