Measures product volatility and the likelihood of a trend change.
Average True Range (ATR) represents the volatility of a product. True Range is the greatest value of the differences between this period’s high and low, the previous period’s close and this period’s high, and the previous period’s close and this period’s low. ATR tracks a moving average of true range over an extended period to measure price activity and direction.
A high ATR indicates high volatility. Low ATR values are common during periods of consolidation, or at the market peak. When the ATR is high, a trend change is likely to occur soon.Chart with ATR showing volatility and change in trend direction: