What does the STARC Band utilize to produce a price band?

The STARC Bands (Stoller Average Range Channels) are designed to create a price band that helps traders identify volatility and potential price reversals. The key to this technique is the use of the Average True Range (ATR), which measures market volatility by taking into account the high-low range of price, the previous close, and any gaps.

Using the ATR over multiple periods, specifically five periods in this case, allows the STARC Bands to capture the average volatility over a relatively short timeframe. This is significant because it reflects recent market conditions, thus providing a more responsive range that can guide traders on potential entry and exit points.

The bands are constructed by adding and subtracting a multiple of the ATR (in this case, calculated over five periods) from the averaged price, which helps to adjust the bands according to the current market behavior. This use of a shorter ATR period enhances the adaptability of the bands to changing market conditions, making it a valuable tool for technical analysts and traders.

In contrast, the other options do not align with how STARC Bands are formulated. For instance, using ATR over a single period would not capture volatility effectively, while MACD is primarily an indicator that focuses on momentum rather than volatility. Averaged price over 10