Reprinted from: http://www.alpari.co.uk/en/market-analysis-guide/technical-analysis/atr.html

Oscillators: Average True Range (ATR)

Average True Range (ATR) is a market volatility index developed and described by W. Wilder in his book "New concepts of the technical trading systems".

True Range is the greatest among three following volumes:

• the difference between the top and the bottom of the current bar;
• the difference between the close of the previous bar and the top of the current bar;
• the difference between the close of the previous bar and the low of the current bar.

Average True Range (ATR) is the moving average of the true range values. To add Average True Range index in MetaTrader 4 use the "Insert -> Indicators -> Oscillators -> Average True Range" menu sequence:

Average True Range (ATR)

Average True Range (ATR) oscillator analysis basics:

• The greater the oscillator value, the greater the possibility for trend reversal.
• The smaller the value the weaker the trend.