Average True Range (ATR) is a technical analysis indicator developed by J. Welles Wilder, based on trading ranges smoothed by an N-day exponential moving average.

The range of a day's trading is simply high − low. The true range extends it to yesterday's closing price if it was outside of today's range:

true range = max(high,closeprev) − min(low,closeprev)

The average true range is then an N-day exponential moving average of the true range values. Wilder recommended a 14-period smoothing. Note this is by his reckoning of EMA periods (see the EMA article on that), meaning an α=1/14.

The idea of ranges is that they show the commitment or enthusiasm of traders. Large or increasing ranges suggest traders prepared to continue to bid up or sell down a stock through the course of the day. Decreasing range suggests waning interest.

Technical Analysis

Accumulation / Distribution Index (ADI)	PAC Charts (PAC)
Average True Range (ATR)	Parabolic SAR (SAR)
Bollinger Bands (BB)	Pivot Point (PPT)
Breakout (BRK)	Point & Figure Charts (PFC)
Commodity Channel Index (CCI)	Relative Strength Index (RSI)
Elliot Wave Principal (EWP)	Resistance (RES)
Hikkake Pattern (HIKK)	Rahul Mohindar Oscillator (RMO)
Moving Average Conv. Div. (MACD)	Stochastic Oscillator (STOCH)
Momentum (MMT)	Support (SUPPT)
Money Flow (MF)	Trend Line (TREND)
On Balance Volume (OBV)	Trix (TRIX)

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