Trade Stock Indices

ATR Technical Analysis & ATR Trade Signals

Developed by J. Welles Wilder

This indicator tracks volatility. It shows the price range over a set period for a stock. ATR ignores direction. It won't signal if the trend goes up or down.

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

High ATR indicator values

High Average True Range indicator values signaled a market bottom following 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 determined by summing these values and calculating the mean.

Technical Analysis and How to Generate Signals

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

A potential trend reversal indication is suggested by the trading technical indicator's value: the greater the indicator's value, the higher the likelihood of a subsequent trend shift.

This is how strong the trend is - The smaller the trading tool's number, the weaker the market trend change is.

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

Technical Analysis in Indices Trade

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