A trend can be identified when there is a continuous price movement in a particular direction either uptrend or downtrend. The ATR indicator is a very powerful indicator that can be used to strength of a trend and also trend reversal signs. Like we all know, in the area of high market volatility which is represented on the chart with big body candlesticks moving upwards or downwards, the ATR indicator shows a corresponding spike in the ATR value as it shows that there is strong dominant force that pushes the price upwards or downwards. This can become very powerful in highlighting the strength of a trend.
From the BNB/USDT chart, we can see that there was a resistance level at around the 445.5 price point. We can see that the ATR value was decreasing in a downward slope. The price of BNB finally broke above the resistance level and we can see that the ATR value corresponded with the resistance breakout with a huge spike in the ATR value. This means that there is a possibility that buyers are about to take control of the market and that the buying pressure is about to become the dominant price force.
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Change in Trend
Trend reversals is one of the signals that can be observed on the chart and the ATR indicator is also a great tool that can help signal potential trend reversal in the market. When the market is moving sideways or ranging, it simply means that there isn’t any dominant force present and that there is indecision in the market. This can mean that there is a potential movement upwards or downwards. When there is a sideways movement is after a downtrend, it can be a strong indication that the downtrend momentum is weakening and there is a potential upcoming reversal.
On the chart, we can see that in the area where the price was moving sideways after a downtrend, The ATR indicator also corresponded with a decreasing downward slope from high volatility to low volatility. This means that there downward dominant force has lost its momentum. After that, there was an increasing upward slope on the ATR indicator which was a strong indication that the buyers are about to take control and that there is a presence of a dominant price force which corresponded with the increasing ATR value.
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