Keltner Channel
Keltner Channel is a volatility band using an EMA and ATR, similar to Bollinger Bands but smoother.
What It Measures
Trend with volatility envelope: price relative to an EMA widened by ATR.
The Math (Simplified)
Middle = EMA(20) of close. Upper/Lower = Middle ± multiplier × ATR(10). Bands expand when volatility rises.
Default Inputs & Tuning
EMA 20, ATR 10, multiplier 2.0 is standard. Higher multiplier makes the channel wider and signals rarer.
When It Works (Market Edge)
Trending markets with volatility-adjusted mean reversion: buying near the lower Keltner in an uptrend can be high-probability.
When It Fails
Low-volatility squeezes: bands narrow and price hugs the EMA, giving no edge — confusion with Bollinger behavior.
Common Myths
Myth: Keltner and Bollinger are interchangeable.
Truth: Bollinger uses standard deviation (price dispersion); Keltner uses ATR (range). Keltner is smoother and less sensitive to outliers.
Loading...