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NIFTY

8924.70      16.85 0.19%

BANK NIFTY

20883.90      22.95 0.11%
ACC 1463.00 (-0.30%) Link
Symbol     LTP Chng%
RIIL 460.90   + 13.72
RELIANCE 1203.00   + 10.55
ORIENTCEM 145.30   + 9.62
AVANTIFEED 648.95   + 9.33
WABAG 552.55   + 5.30
Symbol     LTP Chng%
SJVN 34.15    -5.92
ITDCEM 152.50    -5.13
JPINFRATEC 10.20    -5.12
MARKSANS 48.50    -4.15
PAGEIND 13871.05    -3.42
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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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