Trends/Volatility and bands

ATR bands

A moving average with bands set at a multiple of the average true range above and below it.

Volatility and bandsBest on 3M, 6M, 1YAlso called average true range bands

Illustration of the ATR bands shape. It is a sketch, not real price data.

What it shows

ATR bands are like Keltner channels with the multiplier and the averages chosen differently. The middle line is a simple average and the bands are set at 2 times the 14-bar average true range.

They show how many typical bar ranges price is from its average.

How we find it

The same code that draws it on your chart follows these steps, with the same result every time.

Compute the 20-bar SMA of the close.
Compute the 14-bar ATR.
Upper band = SMA + 2 × ATR.
Lower band = SMA − 2 × ATR.

Starting values: SMA 20; ATR 14; Multiplier 2. These are proposed and will be tuned on real price data before launch.

How to read it

The gray line is the average. Blue lines are the bands.
The panel shows ATR.
Wider bands follow bigger bar ranges.

Status labels you may see

Label	What it means
Inside the bands	Close is between the lines.
Above the upper band	Close is above the top.
Below the lower band	Close is below the bottom.

What cancels it

Nothing cancels it.

What traders check next

Whether ATR is rising or falling.
How often price touches the bands.
The slope of the middle line.

Limits

Multiplier and lengths are conventions.
ATR lags.
Similar to Keltner channels.

Try it in forecastviz

Open any ticker and choose Volatility and bands → ATR bands in the left menu.
Switch between 3M, 6M, 1Y to see how the picture changes.
Compare with Keltner channels and Average true range on the same chart.

Open on a ticker

Questions

How is it different from Keltner?

Keltner uses an EMA and a 10-bar ATR. ATR bands here use an SMA and a 14-bar ATR.

Why 14?

Wilder's original ATR used 14 bars.