Here is another example, but on 4-hour chart: Chart #3 | 4-hour EUR/USD and ATR (21) See – all reversals have happened when the market has hit a new high and ATR has reached lows. Also pay attention that the market is forming new top, while ATR is moving to low again, so reversal or upper strong move is probable in the nearest perspective. In other words, ATR is indicator that is worthy of your attention to it. The next indicator is also a very useful tool, although it also does not show direction of possible move, but it could tell you probable distance that market could pass after breakout. This is the Range of Price Channel. Volatility by Range of Price Channel (RPC) This indicator also is not normalized and its formula is very simple: RPC = Absolute value of (High-Low n-periods ago). So, if you period is 10, then it RPC will show you difference between current high and low 10-periods ago, etc. But why this indicator is so important? Because any market has its own pulse frequency and some minimums and maximums levels that hold due to the nature of a particular market - so as with harmonic number. That’s why when the market reaches these levels RPC could tell you what to expect – breakout or sideways consolidation.