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Friday, June 20. 2008

Average True Range (ATR)

What Does It Mean?

Average True Range (ATR) Technical Indicator is an indicator that shows volatility of the market. It was introduced by Welles Wilder in his book "New concepts in technical trading systems".

This indicator has been used as a component of numerous other indicators and trading systems ever since.

Average True Range Example

Putting It To Use

Wilder has found that high ATR values often occur at market bottoms following a "panic" sell-off.

Low Average True Range values are often found during extended sideways periods, such as those found at tops and after consolidation periods.

The Average True Range can be interpreted using the same techniques that are used with the other volatility indicators.

Very important: The higher the value of the indicator, the higher the probability of a trend change; the lower the indicator's value, the weaker the trend movement is.

Posted by

Matteo Bruno

in Technical Indicators at 02:48 | Comments (0) | Trackback (1)

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