ATR Action (Signed) + Signals + Confidence

ATR Action (Signed) — Context-Aware Volatility Signals with Confidence Scoring

ATR Action (Signed) is a volatility-normalized indicator designed to answer a simple but often overlooked question:

Was today’s move meaningful — or just noise?

Instead of measuring raw price change, this indicator compares today’s percent move to the instrument’s typical daily volatility, expressed as a normalized, signed value called ATR Action.

What makes this different

Most ATR-based tools measure range.
This script measures directional impact.

ATR Action answers:

How large was today’s move relative to normal volatility?

Was the move statistically notable or routine?

Did it occur with or against the prevailing trend?

By combining volatility normalization, trend context, and signal classification, the indicator helps distinguish:

Noise vs. meaningful expansion

Opportunistic dips vs. structural weakness

Momentum continuation vs. exhaustion

Core Concepts

ATR% (Average Daily Volatility)
Calculated as the average absolute daily percent move over a user-defined period.
This provides a “daily noise baseline” specific to each instrument.

ATR Action (Signed)

ATR Action = Today’s % Change ÷ ATR%


Positive values = up days

Negative values = down days

|1.0| ≈ normal daily move

|1.5+| = unusually large move

|2.5+| = extreme move

This allows consistent interpretation across stocks, crypto, and ETFs.

Signals (context-aware)

Signals are generated only when volatility expansion is meaningful and interpreted through trend context:

BUY / ADD
Large down day within an uptrend (potential shakeout)

MOMENTUM
Large up day within an uptrend

TRIM / SELL
Large up day within a downtrend

RISK-OFF
Large down day within a downtrend

No signals are generated during normal volatility.

Confidence Score (0–100)

Each signal includes a confidence score, derived from:

Magnitude beyond volatility thresholds

Alignment with trend direction

This is not a probability — it is a relative strength gauge to help compare setups and manage position sizing.

On-Chart Table & Explainer

The indicator includes:

A compact table showing ATR Action, ATR%, today’s move, trend state, signal, and confidence

An optional Explainer Panel (toggleable in settings) that documents each metric directly on the chart for transparency and education

Intended Use

ATR Action is designed for:

Swing traders and position traders

Scaling in/out rather than binary entries

Comparing volatility events across different instruments

Filtering emotional reactions during high-volatility periods

It does not predict direction and does not repaint.

Final Notes

This script emphasizes context over prediction.
Large moves matter — but only when viewed relative to normal behavior and prevailing trend.

Use ATR Action to frame decisions, not replace them.