DYO: Average True Range Channel

A technique published in Futures Magazine is used by Joe Duffy for identifying Support and Resistance levels.  Joe calls the indicator the 3x5ATR.  

Click here for more information:  www.futuresmag.com/library/daytrade97/day7.html .  

The method of calculation for this indicator is:

1. Add up the true ranges for the last five days and divide by five.  This is the 5ATR.
2. Calculate a three-day simple moving average of the highs and a three-day simple moving average of the lows.
3. To calculate the 3x5ATR for potential resistance, add the 5ATR to the three-day moving average of the lows. To calculate the 3x5ATR for support, subtract the 5ATR from the three-day average of the highs.

This study can be implemented in Ensign Windows using the Design Your Own™ study feature.

Line A calculates the 3 bar simple average of the High and saves the result in Global Variable (GV) [1].

Line B calculates the 5 bar simple average of the Average True Range and saves the result in GV [2].

Line C calculates the Support level by subtracting 5ATR from 3High.  The result is plotted in Blue as the lower band.

Line D calculates the 3 bar simple average of the Low and saves the result in GV [1].

Line E calculates the Resistance level by adding 5ATR to the 3Low.  The result is plotted in Blue as the upper band.

A template named 3x5ATR can be downloaded from the Ensign web site using the Internet Services form.