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NIFTY

11551.75      81.00 0.71%

BANK NIFTY

28274.25      145.70 0.52%
ACC 1599.30 (0.34%) Link
Symbol     LTP Chng%
HCC 15.20   + 18.75
WELCORP 140.80   + 11.48
SHK 219.40   + 9.15
PFS 18.25   + 7.99
JINDALSAW 85.45   + 7.08
Symbol     LTP Chng%
GESHIP 284.55    -6.12
FEDERALBNK 81.50    -5.51
TTKPRESTIG 5962.80    -5.04
GRAPHITE 1041.75    -5.00
TNPL 300.50    -4.27
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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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