[isatrader]

Can you please clarify, roughly, what is the MAXIMUM % away from the 30 ema that one should be on the weekly chart if buying a stock so as to not be too extended? I understand ideally you would want to buy right around the 30 EMA as the entry.

You note "stock is now extended "3 times it's 52 week average true range (ATR)"
What parameter (standard setting is 14) must I set the ATR indicator on the weekly chart to know that price is now 3 times 52 week avg ATR? Ie. how did you determine price is now 3 ties 52 week avg ATR? I have never  used the ATR before.

I have attached the chart showing weekly  ATR (setting at 14) but do not understand how to use it  to determine that price is now 3 times avg. 52 week ATR.

Thanks,
Brian

I like to use the ATR with a 52 week setting. So change the Parameters setting to 52 if you'd like to use that, but any amount is acceptable really as it depends on your trading timescale as to what you should use. So 52 weeks is just my preferred setting for investor positions, as it's the average weekly price range of the stock from the last year.

I use a maximum of 2 times the 52 week Average True Range (ATR) from the stop loss position to determine if a stock is too extended or not for me. But as I said other people use their own settings, as mine are quite strict. All I would say is to be consistent.

To calculate the ATR distance. Take the current ATR amount shown on the chart. So for example if it's 0.78, and the price is 31, and the stop loss position would be 29, then 31 minus 29 = 2, and 2 divided by 0.78 = 2.56. So it would be at 2.56 times the weekly ATR. Which would mean it's above my maximum tolerance of 2 times the weekly ATR.