Average True Range Technical Analysis & ATR Trading Signals

Developed by J. Welles Wilder

This energies indicator is a measure of volatility - it measures the range of energies price movement for a particular energies price period. The ATR is a directionless indicator & it does not determine the direction of the trend.

High ATR values

High Average True Range indicator values indicated market bottom after a selloff.

Low ATR values

Low Average True Range values showed extended periods of sideways energies price movement- Price Range, such as those found at market tops and consolidation periods. Low ATR values are typical for the periods of sideways movement of long duration which happen at the top of the energies market and during consolidation.

Calculation

This energies technical indicator is calculated using the following:

• Difference between the current high and the current low

• Difference between the previous closing energies price & the current high

• Difference between the previous closing energies price & the current low

The final Average is calculated by adding these values and calculating the average.

Energy Technical Analysis & How to Generate Trading Signals

Average True Range technical indicator can be analyzed using the same principles as other volatility indicators.

Possible energies trend change trading signal - The higher the value of indicator, the higher the probability of a trend change;

Measure of energies trend momentum - The lower the indicator's value, the weaker the energies trend movement.

Analysis in Energy Trading