Just another tool.
At some point a human being has to make the decision to trade or the decision to incorporate the factoid in the algorithm. Either way, that is the point when we move from science to art.
From Schaeffer's Research:
One technical indicator I like to follow is the average true range (ATR). Simply put, it has nothing to do with price trend, and instead focuses only on price volatility. It was created by J. Welles Wilder, and you can read more about it here....
...Take a look at the S&P 500 Index (SPX) going back to right before the May 2010 flash crash. On three occasions, the ATR began to turn higher, well ahead of some large sell-offs. In other words, this has been a warning of coming pain. Now look at the recent action over the past month. Once again, this indicator is turning higher. We've already seen some weakness in the SPX recently, but should the ATR continue to trend higher, it could suggest more selling is in the cards. This is one to watch.
Chart courtesy of StockCharts.com