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NIFTY

10147.55      -5.55 -0.05%

BANK NIFTY

25041.55      -5.35 -0.02%
ACC 1817.20 (-0.47%) Link
Symbol     LTP Chng%
JAICORPLTD 132.80   + 19.96
RAIN 181.00   + 16.74
RIIL 570.40   + 16.72
PUNJLLOYD 25.00   + 10.86
TIDEWATER 7171.45   + 10.23
Symbol     LTP Chng%
RTNPOWER 6.20    -6.06
SHILPI 21.85    -5.00
RELIGARE 44.95    -4.97
HFCL 34.20    -4.87
JPASSOCIAT 17.65    -4.85
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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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