ATR measures volatility by averaging the "true range" (the greater of high-low, high-previous close, or low-previous close) over N bars, usually 14. A 14-period ATR of 80 pips on EUR/USD H1 means each hourly bar moves about 80 pips on average — useful for setting stop distances and profit targets that respect current market conditions.
ATR does not predict direction, only magnitude. Common applications: setting stops at 1–3× ATR below entry on a long, scaling position size inversely with ATR to keep risk constant, and filtering out setups where current ATR is unusually high or low for the instrument.