ATR Momentum

The ATR Momentum indicator is a technical analysis tool that assesses price movement momentum by comparing a short-term Average True Range (ATR) against a long-term ATR.

Usage

The indicator can be used to identify shifts in market volatility and momentum. By monitoring the relationship between the two ATR lines, traders can gauge whether price action is becoming more or less aggressive.

• Increasing Momentum: When the Short ATR is above the Long ATR (adjusted by the multiplier), the space between the lines is filled with green. This suggests that recent volatility is outstripping the long-term average, indicating expanding momentum.
• Decreasing Momentum: When the Short ATR falls below the Long ATR, the space is filled with red. This indicates that current price ranges are contracting relative to the historical average, signaling a loss of momentum or a consolidation phase.

Details

The script calculates two distinct ATR values based on user-defined lengths. The "expanding" state is determined by whether the short-term volatility measurement exceeds the long-term measurement. To provide more flexibility, a multiplier is applied to the Long ATR, allowing users to fine-tune the sensitivity of the momentum crossover signals.

Settings

• Short ATR Length: Sets the lookback period for the fast ATR calculation (default is 5).
• Long ATR Length: Sets the lookback period for the slow ATR calculation (default is 20).
• Multiplier: A scaling factor applied to the Long ATR to adjust the threshold for momentum expansion.

FAQ

How do I interpret the green and red fills? Green fills indicate that the short-term ATR is higher than the long-term ATR, representing increasing momentum. Red fills indicate the short-term ATR is lower, representing decreasing momentum.

Can I use this on any timeframe? Yes, the ATR Momentum indicator adapts to the timeframe of the chart it is applied to, measuring volatility relative to that specific period.

How can I access ATR Momentum? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.