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NIFTY

9344.15      37.55 0.40%

BANK NIFTY

22217.25      162.55 0.74%
ACC 1606.60 (-0.04%) Link
Symbol     LTP Chng%
ALLCARGO 195.40   + 8.77
TVSSRICHAK 4171.00   + 7.08
NIITTECH 466.50   + 6.89
MCLEODRUSS 192.15   + 6.45
DCMSHRIRAM 358.05   + 5.31
Symbol     LTP Chng%
SHILPI 165.90    -19.99
ZENSARTECH 832.10    -9.45
ADANIENT 139.95    -6.67
ICICIPRULI 399.05    -4.97
GSPL 188.25    -4.25
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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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