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NIFTY

10817.00      28.45 0.26%

BANK NIFTY

26537.40      248.30 0.94%
ACC 1839.00 (-0.08%) Link
Symbol     LTP Chng%
MINDTREE 684.15   + 9.49
GRUH 598.10   + 8.38
WABCOINDIA 7700.75   + 4.95
MPHASIS 794.35   + 4.23
GULFOILLUB 916.40   + 3.86
Symbol     LTP Chng%
JUSTDIAL 557.65    -12.24
ADANIPOWER 36.95    -9.33
RCOM 29.35    -9.27
JPASSOCIAT 20.85    -8.55
DEN 122.70    -8.06
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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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