You’re trading your favorite intrument using a the 1-hour chart. The market, from your one-hour chart perspective, is plunging. You check your Trend Box.
The 1H Range indicates that the market has exceeded its 24-bar ATR by nearly 200%. But the Daily Range indicates that it the market is approaching only 98% of its ATR. You cTF momentum line is reading Trend. But your hTF momentum is reading Fade ++.
Now, considering the 1-hour range, might this mean that a short-term pullback is imminent? Clearly, your trading instrument is in a downtrend, as confirmed by the cTF momentum. But the hFT momentum also signals a strong “Fade.”
Obviously, you don’t just jump into a fade trade. If the Trend Box reading confirms your own personal assessment of the situation, you may want to reposition your perspective toward a trend reversal, waiting for a short pullback toward the upside, while preparing for a much larger and more substantial reversal in the sessions ahead.
As you can see in the example above, Average True Range plays a critical role in evaluating the quality of a trend.