From Traderpedia

Definition: An indicator that provides a measure of a security's volatility.

Developed by J. Welles Wilder, the Average True Range (ATR) is a moving average of the True Ranges (see calculation).

According to Wilder, high ATR values are seen frequently at market bottoms, indicative of selling climaxes. Low ATR values are often seen during sideways consolidation movements, such as those which occur prior to breakout.

[edit] Calculation

The daily True Range is the widest of:

- the range between the day's high and the day's low

- the range between the day's high and the previous day's close

- the range between the day's low and the previous day's close

[edit] See also

• Technical Analysis