OPEN-SOURCE SCRIPT
Directional ATR
EURUSD TLDR: A custom volatility indicator that combines Average True Range with candle direction.
The Directional ATR (DATR) is an indicator that enhances the traditional Average True Range (ATR) by incorporating the direction of the candle (bullish or bearish).
This indicator is designed to help traders identify trend strength, potential trend reversals, and market volatility.
Key Features:
- Trend Confirmation: Positive and increasing DATR values suggest a bullish trend, while negative and decreasing values indicate a bearish trend. A higher absolute DATR value signifies a stronger trend.
- Trend Reversal: A change in the direction of the DATR from positive to negative or vice versa may signal a potential trend reversal.
- Volatility: Like the standard ATR, the DATR can be used to gauge market volatility, with larger absolute values indicating higher volatility and smaller values suggesting lower volatility.
- Divergence: Divergence between the price and the DATR could signal a potential weakening of the trend and an upcoming reversal.
- Overbought/Oversold Levels: Extreme DATR values can be used to identify overbought or oversold market conditions, signaling potential reversals or corrections.
Please note that the Directional ATR is just an indicator, and the interpretations provided are based on its underlying logic.
It is essential to combine the DATR with other technical analysis tools and test the indicator on historical data before using it in your trading strategy. Additionally, consider other factors such as risk management, and your own trading style.
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
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