See it in action (click thumbnail to enlarge):
ATR Boundaries provides True Range Boundary limits for an Instrument over a specified number of periods. It’s a very effective way of setting limits to daily movements within currency pairs.
Currencies will trade within 20 period ATR Boundaries 80% of the time – and this stat alone makes this indicator extremely powerful for determining movements in currency pairs. For this reason, it’s utilised within several of our own high end automated and manual trading systems.
If you are a bit more experienced you can think of ATR boundaries as Bollinger Bands but with a defined level of accuracy so they are easier to build trading systems and strategies off of them.
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What is it?
An Indicator automatically displaying on your chart the Average True Range as a visual boundary around price, with an upper and lower limit.
What’s the best thing about it?
Over a 20 year test, the ATR contained price action 80% of the time.
Also, it works on all time frames, with adjustable period settings displaying the average true range for the time frame selected, and offers powerful swing trading opportunities on higher time frames.
It can overlay higher time frame ATR boundaries on to lower time frame price action for powerful intra-day trading opportunities, and is a fantastic tool for use in stop placement and profit targets.
What does it look like?
The orange bands around price are the ATR boundaries. You can see highlighted areas where price tested the ATR boundaries and reversed sharply.
The regular ATR indicator is included in the sub-chart. As you can see, ATR boundaries is far more effective for trading than using the regular ATR indicator.
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