Trends/Gaps and breakouts

Volatility breakout

A close that is more than a multiple of the average true range from the previous close.

Gaps and breakoutsBest on 3M, 6MAlso called ATR breakout

Illustration of the volatility breakout shape. It is a sketch, not real price data.

What it shows

A volatility breakout is a move bigger than usual. If today's close is more than 1.5 times the 14-bar ATR above (or below) yesterday's close, we mark a volatility breakout.

It measures the size of a move compared with normal moves for that stock.

How we find it

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

Compute ATR(14).
Move = close − previous close.
Mark if |move| > 1.5 × ATR.
Show the multiple.

Starting values: ATR 14; Multiple 1.5. These are proposed and will be tuned on real price data before launch.

How to read it

The gold candle is the big bar.
Panel shows the move in ATR units.
The dashed line is the 1.5 level.

Status labels you may see

Label	What it means
Big up move	Move above +1.5 ATR.
Big down move	Move below −1.5 ATR.
Normal	Within ±1.5 ATR.

What cancels it

Nothing cancels it.

What traders check next

Volume.
News.
Next bar.

Limits

The multiple is a convention.
Big moves happen in news.
Says nothing about what follows.

Try it in forecastviz

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

Open on a ticker

Questions

Why ATR?

It adapts to each stock's usual move.

Is a big bar a signal?

No claim.