Average True Range ATR Oil Technical Analysis and ATR Oil Trade Signals

Developed by J. Welles Wilder

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

High ATR values

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

Low ATR values

Low Average True Range values showed extended periods of sideways crude oil price movement- Oil 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 oil market and during consolidation.

Calculation

This oil technical indicator is calculated using the following:

• Difference between the current high and the current low

• Difference between the previous closing crude oil price and the current high

• Difference between the previous closing crude oil price & the current low

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

Oil Technical Analysis & Generating Crude Trading Signals

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

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

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

Technical Analysis in Oil Trading