Understanding oscillators can be very beneficial to a lot of traders in the world. Forex is very broad and needs a firm understanding. Oscillators are just technical analysis ratios used to predict the forex market – once they have forecast the market, you still need to make a conclusion by yourself.
These Oscillators are calculated by Indicators, using the moving average of which now we’ll discuss the Average True Range (ATR) Indicator.
Oscillators can also be used to identify a trend reversing bearing in mind the concept of convergence and divergence of the curve oscillator – taking account of the direction of price movements.
ATR (Average True Range) Indicator is a tool that was introduced by Welles Wilder. This tool is simply used to measure the market’s volatility. ATR isn’t complex at all – it shows you more than you can ask for, such as limit moves and volatility of gaps.
ART valuates the interests of the market prices for all the strong moves in the market as well as break-outs – which in turn would normally be followed by large ranges.
ATR can be used with 14 periods – from daily and longer timeframes – this will reflect volatility values s that are in relation to the trading instrument’s price. Low ART corresponds to a range of trading. High ART corresponds to a trend breakout or breakdown.
ART – moving average of the true range, can be used to calculate the following distance values:
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- today’s high to today’s low
- yesterday’s close to today’s high
- yesterday’s close to today’s low
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