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NIFTY

10389.70      40.95 0.40%

BANK NIFTY

25779.65      43.40 0.17%
ACC 1697.70 (-0.85%) Link
Symbol     LTP Chng%
JAICORPLTD 189.65   + 17.76
PRAJIND 117.10   + 10.52
GMRINFRA 18.65   + 10.03
TV18BRDCST 50.55   + 9.65
QUESS 924.45   + 7.74
Symbol     LTP Chng%
OBEROIRLTY 492.30    -4.04
RAMCOSYS 412.35    -3.49
PVR 1303.20    -3.40
WELSPUNIND 73.45    -3.36
AVANTIFEED 2604.60    -2.90
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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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