RSI compares recent gains and losses; MACD compares exponential averages and their signal line. ATR summarizes true ranges, including gaps relative to the previous close. These are different calculations, but they often reuse the same underlying prices.
An overbought reading does not require an immediate fall. Trends can remain extended, and a volatility measure has no direction by itself. Avoid counting several closely related indicators as independent evidence. State the exact decision an indicator changes, and remove it if it adds no measurable value.
Worked example
A strategy might use an ATR-based distance to normalize its stop across changing conditions. If the planned distance doubles while the cash risk stays constant, position size must fall approximately by half.
Check your understanding
Does a rising ATR tell you whether to buy or sell?
Show explanation
No. It indicates larger recent ranges, not their future direction.
Progress is stored on this device.