How the ATR indicator allows us to highlight the strength of a trend and identify any signs of a change in direction
Hello friends of @Project.HOPE, continuing with the thematic line on the ATR indicator, in this opportunity and as I promised you in the previous post, today I will address technical aspects related to how the ATR indicator allows us to highlight the strength of a trend and identify any sign of change of direction.
For any trader to know the direction and strength of a trend is of vital importance for the success of our purchase / sale operations, hence, information is used on how much a financial instrument normally moves in a given period and what is the strength of the trend, this in order to establish the entry or exit points of the market that generate economic benefits.
Although the trend that reaches the price action can take a bearish or bullish direction, the ATR indicator being a technical volatility tool cannot be used to identify a trend, hence, it is necessary to incorporate other technical tools to the strategy in order to find the market trend and identify its strength..
A classic behavior of price action is that when a given market pauses and moves sideways, the price will begin to fall whenever it encounters resistance well marked by previous behavior, and to bounce off established supports also in stocks.
Therefore, when the price action experiences rapid movements and then breaks through either established resistance or support, in either of these two scenarios the ATR indicator offers us the possibility of being able to identify volatility, strength and trend change, as shown in the price action of the ETH/USDT. pair.
I hope that the information shared in this post has been very useful, in the next publication I will describe the particularity of projecting volatility using the ATR indicator and its advantages for a successful technical analysis.
SOURCES CONSULTED
Cory Mitchell How Average True Range (ATR) Can Improve Your Trading. Link
OBSERVATION:
The cover image was designed by the author: @lupafilotaxia, incorporating image: TradingView
hi @lupafilotaxia
This type of educational article is what we need in the crypto community to maximize profits and minimize losses. I enjoyed reading your post and am looking forward to the next one, in the meantime, have a nice day buddy