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NIFTY

10617.80      47.25 0.45%

BANK NIFTY

25010.90      196.50 0.79%
ACC 1545.40 (-1.42%) Link
Symbol     LTP Chng%
YESBANK 352.40   + 8.35
JMFINANCIL 135.30   + 7.94
BFUTILITIE 431.10   + 7.94
DEN 102.20   + 7.35
HATHWAY 34.85   + 7.23
Symbol     LTP Chng%
RNAVAL 19.35    -15.13
DCMSHRIRAM 325.55    -11.87
BHUSANSTL 26.60    -9.98
JSL 96.25    -6.19
HDIL 36.95    -5.74
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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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