Average True Range CFD Technical Analysis and ATR CFD Signals

Developed by J. Welles Wilder

This cfds technical indicator is a measure of volatility - it measures the range of cfd price movement for a particular cfd price period. The ATR is a directionless indicator and it does not determine the direction of the CFD trend.

High ATR values

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

Low ATR values

Low Average True Range values showed extended periods of sideways cfd price movement- CFD 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 cfd market and during consolidation.

Calculation

This cfds technical technical indicator is calculated using the following:

• Difference between the current high and the current low

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

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

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

CFD Technical Analysis and Generating CFDs Signals

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

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

Measure of cfd trend momentum - The lower the indicator’s value, the weaker the cfd trend movement.

Technical Analysis in CFD Trading