First you must distinguish ATR indicator and ATR Channel indicator.
In this case, ATR indicator is used as an alternative to the standard deviation.
Standard deviation we use when calculating Bullinger Bands.
Simply put, ATR Channel indicator, is in every respect, a derivative of Bullinger Bands indicators, and as such, can be used in the same way.
On this chart you can see simultaneously both indicators.
You may notice that the ATR channel indicator narrows
when the value of ATR Indicator, drops.