True Range (TR)

The True Range (TR) is a measure of the Daily Range that is calculated as the greatest of the following values:
The difference between the day’s high and low,
The difference between the previous day’s closing price and the current day’s high,
Or the difference between the previous day’s closing price and the current day’s low

Since we measure the magnitude of the range and not the direction, we use the ABS() function to return positive values.

(D1) = Absolute Value of (Today’s High – Today’s Low)

= ABS (85 – 75)
= 10

(D2) = Absolute Value of (Today’s High – Yesterday’s Close )
= ABS (85 – 70)
= 15

(D3) = Absolute Value of (Yesterday’s Close – Today’s Low)
= ABS (70 -75)
= 5

True Range = MAX(D1, D2, D3)
= MAX(10, 15, 5)
= 15