Average True Range (ATR)

The True Range indicator is recognised by three key factors:

  • Current high less the current low
  • The absolute value of the current high less the previous close
  • The absolute value of the current low less the previous close

The Average True Range is a moving average of the True Ranges - the True Range is plotted for at least 14 days to obtain the Average True Range.

For example, a change in ATR value from 2 to 3 for a $15 stock represents a move of Price/ATR from 13% to 20%. A change in ATR value from 2 to 3 on a $50 stock represents a move of Price/ATR from 4% to 6%.

Average True Range (ATR)

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