Average True Range - ATR Technical Analysis & ATR MT5 Indicator

Developed by J. Welles Wilder

This MT5 indicator is a measure of volatility - it measures the range of forex price movement for a particular forex price period. The ATR is a directionless indicator & it does not determine the direction of the Forex trend.

High ATR values

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

Low ATR values

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

Calculation

This MT5 technical indicator is calculated using the following:

• Difference between the current high & the current low

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

• Difference between the previous closing forex price and the current low

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

Forex Technical Analysis & How to Generate Signals

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

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

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

Technical Analysis in Forex Trading