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NIFTY

16887.00      -207.00 -1.00%

BANK NIFTY

30093.30      -260.95 -0.86%
ACC 2301.00 (-5.00%) Link
Symbol     LTP Chng%
COCHINSHIP 485.00   + 10.00
VIPIND 715.00   + 7.00
RVNL 36.00   + 7.00
LUPIN 722.00   + 6.00
AUROPHARMA 535.00   + 5.00
Symbol     LTP Chng%
SUZLON 8.00    -9.00
ADANIGREEN 2074.00    -8.00
ESSELPACK 251.85    -7.66
EICHERMOT 3463.00    -6.00
INDIACEM 254.00    -6.00
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Average True Range (ATR)

Introduction

The True Range Indicator is the greatest of the following: - Current high less the current low. - The absolute value of the current high less the previous close. - The absolute value of the current low less the previous close. "The average true range is a moving average (generally 14-days) of the true ranges".

ATR was originally developed for commodities but the indicator can also be used for stocks and indexes. Simply put, a stock experiencing a high level of volatility will have a higher ATR, and a low volatility stock will have a lower ATR.

Formula

Current ATR = [(Prior ATR x 13) + Current TR] / 14

Advantage

ATR is not a directional indicator, such as MACD or RSI. Instead, ATR is a unique volatility indicator that reflects the degree of interest or disinterest in a move. Strong moves, in either direction, are often accompanied by large ranges, or large True Ranges. This is especially true at the beginning of a move. Uninspiring moves can be accompanied by relatively narrow ranges. As such, ATR can be used to validate the enthusiasm behind a move or breakout. A bullish reversal with an increase in ATR would show strong buying pressure and reinforce the reversal.

Sample Calculation

Technical chart for ATR

Technical Indicators

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