ATR Stock Analysis & ATR Trading Signals
Created by J. Welles Wilder
This stock indicator is a measure of volatility - it measures the range of stocks price movement for a particular stocks price period. The ATR is a directionless indicator & it does not determine the direction of the Stock trend.
High ATR values
High Average True Range indicator values indicated market bottom after a selloff.
Low ATR values
Low Average True Range values showed extended periods of sideways stocks price movement- Stock Price Range, such as those found at market tops and consolidation periods. Low ATR values are typical for the periods of sideways movement of long duration which happen at the top of the stocks market and during consolidation.
Calculation
This stock technical indicator is calculated using the following:
- Difference between the current high & the current low
- Difference between the previous closing stocks price and the current high
- Difference between the previous closing stocks price & the current low
The final Average is calculated by adding these values & calculating the average.
Stock Trading Analysis & Generating Trading Signals
Average True Range indicator can be analyzed using the same principles as other volatility technical indicators.
Possible stock trend change trading signal - The higher the value of the indicator, the higher the probability of a stock trend change;
Measure of stock trend momentum - The lower the indicator's value, the weaker the stock trend movement.
Technical Analysis in Stock Trading
