The Average True Range (ATR) is a Technical Indicator used in Technical Analysis - 20230221094216 to measure the Volatility of a financial instrument, such as a stock, commodity or currency. It is typically used to identify the overall level of market Volatility and to assess the potential for price movements in the future.
The ATR is calculated by taking the average of the true range over a specified number of periods. The true range is the greatest of the following:
The ATR is then typically smoothed using a moving average to reduce the impact of short-term Volatility on the indicator. The resulting value is the average true range.
The ATR is typically plotted as a line on a chart, and its value is given in the same units as the price of the financial instrument being analyzed. A higher ATR value indicates higher Volatility, while a lower ATR value indicates lower Volatility.
The ATR can be used in different ways, such as to set stop-loss and profit-taking levels, to identify potential Breakouts, and to confirm trends.
Status:: #wiki/notes/mature
Plantations:: Technical Indicators - 20230221104502
References:: Babypips