THE ADR TARGET BANDS
The ADR Target Bands are price target ranges based on the average daily range (ADR) of a market calculated over two different periods. You can determine the two periods in the platform yourself or you can work with the default settings of 7 and 14.
The upper target band is calculated by adding the average daily ranges for the two periods to the current day´s low. The lower target band is calculated by subtracting the average daily ranges from the current day´s high.
The advantages of the ADR Target Bands:
This example shows the ADR Target Bands on the DAX future in a 10-minute chart. The down move stopped when the lower target band based was reached.
In addition to using the ADR Target Bands as targets, some traders open a long position when the market price reaches the lower band and a short sell position when the market price reaches upper band.
This example shows three potential trading signals; two buy signals and one short sell signal.