The Average True Range Technical Indicator (ATR: Average True Range) is an indicator that shows the volatility of the market. It was developed by Welles Wilder in his book "New Systems Concepts in Technical Operations. This set has been used as a component of numerous other indicators and operational systems.
The Average True Range usually reaches a high from the base of the market after a sharp fall in prices panic. The low values \u200b\u200bof the indicator are typical of periods of volatility in long periods that occur in the market picks or consolidation phases. In this way the Average True Range indicator can be used as an indicator of instability.
forecasting principles that can be obtained when using this indicator are: 1 .-
As the indicator has higher values there is a greater possibility of changing momentum.
2 .- The lower value of the weakest indicator is the movement of the trend. Calculation
The True Range is the largest of the three following values:
A) Difference between the current maximum and minimum.
B) Difference between the previous closing price and the current maximum
C) Difference between the previous closing price and the current minimum
R ango The Average True Móviles is the average l values \u200b\u200brange True
The figure below shows the ATR indicator being used in FOREX market JPY / USD
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