How to use the Average True Range indicator ๐
๐ Average True Range (ATR) is a technical analysis indicator that measures market volatility by decomposing the entire range of an asset price for a certain period
Simply put, an asset experiencing a high level of volatility has a higher ATR, and a lower ATR indicates lower volatility for the period evaluated ๐งฎ
This indicator does not indicate the price direction; instead, it is used primarily to measure volatility caused by gaps and limit up or down moves. Trading signals occur relatively rarely (the higher the time frame - the fewer signals occur), but usually indicate significant breakout points.
๐โโ๏ธ For example, you can use ATR to predict when the price of an asset will break out of the trading range it has been in for a long time, usually, after it happens, huge volatility spike follows, and you can use it at your advantage.
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