Trader, author, and technician J. Welles Wilder developed average true range (ATR) in the 1970s as a measurement of price volatility. Wilder believed that the range was directly proportional to volatility, and that range — the high and low of a stock for a given period, be it intraday, daily, weekly, or monthly — was indicative of a trend. If the volatility of a stock increased, it was entering a trend, and if it slowed down, it suggested a reversal. Read on to learn more...
ADX breakouts can signal momentum setups as well as exit conditions for intraday and swing traders.
When price moves substantially above or below its moving average, there’s a good chance (all things being equal) the price will return at least in part toward its average price. The idea of range trading is to capitalize on this tendency of prices to revert to the mean.
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Technical analysis focuses on market action – specifically, volume and price. Technical analysis is only one approach to analyzing stocks. When considering what stocks to buy or sell, you should use the approach that you're most comfortable with. As with all your investments, you must make your own determination whether an investment in any particular security or securities is right for you based on your investment objectives, risk tolerance, and financial situation. Past performance is no guarantee of future results.