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NIFTY

9108.00      21.70 0.24%

BANK NIFTY

21122.55      227.05 1.09%
ACC 1396.45 (-0.31%) Link
Symbol     LTP Chng%
WABCOINDIA 6028.30   + 12.22
SFCL 138.40   + 9.45
KEC 208.20   + 9.35
DCMSHRIRAM 298.50   + 7.94
WELSPUNIND 86.60   + 7.58
Symbol     LTP Chng%
NLCINDIA 109.80    -8.84
JINDALSTEL 119.75    -4.58
SADBHAV 308.65    -3.56
SREINFRA 86.00    -3.32
BRFL 133.00    -3.27
View All

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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