Average True Range & Detrended Price Oscillator

by | Dec 27, 2020

Disclaimer: Posts on the HyperTrader blog and associated HyperLinq websites are for educational and informational purposes only. These posts should not be taken as financial advice, nor are they meant to be viewed as trading advice. HyperLinq Inc. or the authors take no responsibility for any damages or losses.

When trading crypto assets, it is crucial to recognize market conditions. Crypto traders will use several technical analysis tools at the same time to better understand market conditions. This blog will discuss two technical indicators, the Average True Range & Detrended Price Oscillator, which help crypto traders make better trading decisions in markets like BTC & ETH.

Average True Range

J. Welles Wilder developed the Average True Range. ATR is a volatility trading tool. When the volatility of the crypto market rises, the ATR line will also go up. ATR estimates the crypto market volatility by crumbling the whole range of an asset price for that period. The ATR is exercised as the most prominent of the supporting, current high less than the current low, the total value of the current top, the prior close, and the absolute value of the current low less than the preceding end. The actual average range is then a moving average of the valid fields, generally using fourteen days.

Analysts and traders utilize the ATR indicator to start and exit trading positions, and the ATR is a beneficial trading tool to supplement a trading system; HyperTrader supports ATR. As mentioned above, the ATR was formed to enable crypto traders to estimate the periodic volatility of a crypto asset correctly utilizing simple computations. The ATR does not show the crypto asset price direction; instead, ATR is applied mainly to measure volatility generated by breaks and limit movements. The ATR is comparatively simple to measure and needs historical price data.

Detrended Price Oscillator

Average True Range & Detrended Price Oscillator
Average True Range & Detrended Price Oscillator Indicator on HyperTrader

The Detrended Price Oscillator attempts to reduce the impact of short-term price changes in determining the trend in a crypto asset. Specifically, it evens out price changes to present more general price trends. The Detrended Price Oscillator is determined by exerting the crypto asset periods ago and decreasing an X-period simple MA. The default period on the Detrended Price Oscillator is frequently twenty-one periods. This is normal for several trading indicators since the daily time frame is the standard choice for traders, but for crypto, it can vary due to the market being twenty-four/seven. 

Longer-term, glancing at the Detrended Price Oscillator comparative to the asset price chart conveys the opinion that Detrended Price Oscillator does a stable output of indicating tops and bottoms for a crypto asset. Nonetheless, price frequently requires producing a peak or base for the tool to do the same thing. Hence, Detrended Price Oscillator isn’t entirely as efficient in foretelling these movements. 

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Head of Content Marketing @ HyperLinq. His love for Chai and mountains precedes everything. Often wonders about things like, "why $1 earned through leverage feels 100x better than $1 earned selling your time?"
Head of Content Marketing @ HyperLinq. His love for Chai and mountains precedes everything. Often wonders about things like, "why $1 earned through leverage feels 100x better than $1 earned selling your time?"

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