What is Average True Range? Currency Market Trading Indicators

What is Average True Range?

     Average True Range is one of the Technical Indicator which shows instability of the market. It has been used as a part of several other indicators and trading methods ever since.

     It can frequently reach a maximum value at the bottom of the market after an absolute fall in prices occasioned by fright selling. Low values of the indicator are characteristic for the periods of slanting movement of long period which occur at the top of the market and through consolidation. ATR know how to be interpreted according to the same values as other instability indicators.

Ways to find trend:

     The maximum value of the indicator, the higher possibilities of a trend change. The minimum value of the indicator refers weaker trend movement.

Calculation:

There are three ways to calculate true range.

• The current high and low difference.
• Previous closing price and current maximum price difference.
• Previous closing price and current minimum price difference.