The Average True Range (ATR) is a technical analysis indicator that measures market volatility. It calculates the average of the true ranges over a specified period, typically 14 days. The true range considers the current high and low prices, as well as the previous closing price, providing a comprehensive view of price movement. Traders use the ATR to assess potential price fluctuations and make informed decisions about entry and exit points. A higher ATR indicates greater volatility, while a lower ATR suggests a more stable market. This information can help traders manage risk and set appropriate stop-loss levels.