Normalized True Range as a Price-Position Reversal Indicator

Summary

This note describes ATR_Normalize, an indicator attributed to Larry Williams, that scales a moving average of the close-to-low distance by a moving average of true range, then multiplies the ratio by 100. It presents the measure as a way to identify when price is near peaks or troughs. In the document’s interpretation, high readings tend to precede falling prices, while low readings suggest prices may rise.

The note provides the formula concept and a directional interpretation, but no parameter values, chart evidence, testing results, or rules for converting readings into trades. It also mentions that the original implementation depended on an external smoothing library for MetaTrader, which is a platform requirement rather than evidence of effectiveness. The indicator should therefore be treated as a proposed technical signal whose behavior and usefulness would need independent validation across instruments and market conditions.

Key ideas

• ATR_Normalize compares a smoothed close-to-low distance with smoothed true range and expresses the ratio as a percentage.
• The document interprets high readings as potentially preceding declines and low readings as potentially preceding advances.
• The note offers no specified parameter settings, trading rules, or empirical performance evidence.
• The original implementation relies on an external smoothing library for MetaTrader.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.