The ATR provides valuable insights into market conditions by quantifying price volatility. Traders use ATR to adjust their stop-loss and take-profit levels to align with prevailing market movements. It helps in identifying potential breakouts and trend reversals based on changes in volatility. High ATR values suggest heightened risk and larger price swings, while low ATR values indicate lower market activity. Understanding ATR enables traders to manage risk more effectively and refine their trading strategies. Use ATR in combination with trend indicators to confirm market conditions.