ATR: how far price moves in a candle
ATR, the Average True Range, measures how far price typically moves in one candle. Cryptokly uses it to size support and resistance zones and to rank how calm or active a pair is.
What it is
The true range of a candle is the largest of three distances: the candle's high minus its low, the high minus the previous close, and the previous close minus the low. It captures gaps as well as the candle's own size. The Average True Range is the smoothed average of that distance over a period.
ATR is measured in price units, so it answers a plain question: how far does this pair usually move in one candle on this chart?
How we compute it
Cryptokly uses ATR(14), a 14-candle average, on each chart. It plays two roles. First, it sets how wide a zone can be: support and resistance zones are built from nearby pivots and are at most one ATR wide. Second, it ranks volatility: the 1D ATR(14) is compared with its own last 90 days, and the percentile becomes one word, Calm, Normal or High.
Live example
How to read it
A High reading says that candles have recently been large compared with the pair's own history. A Calm reading says the opposite. Both describe the pair against itself, so a Calm large coin and a Calm small coin can move very different amounts in price terms.
ATR has no direction. A High reading appears in rising and falling markets alike, which is why Cryptokly shows it beside the trend and the RSI instead of folding it into them.
Common mistakes
- Reading ATR as a forecast. It describes the candles that already closed; the next candle can be larger or smaller.
- Comparing raw ATR values between pairs. An ATR of 500 means one thing for a coin at 80,000 and another at 2,000; the percentile word compares each pair with itself.
- Treating a Calm reading as safety. Calm periods end, and crypto trading carries a real risk of losing money, up to the whole amount invested.
Questions
Why 14 candles?
14 is the period of the original definition and the one most charting tools share, so a reading is easy to compare with other tools.
Why does a zone have a maximum width?
A zone wider than one ATR would cover more than a typical candle's movement and would describe little. Capping the width keeps each zone a precise band of prices.
Which chart does the volatility word come from?
The 1D chart, compared with the pair's last 90 days.