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Keltner Bands Technical Analysis and Keltner Bands Signals

Created by Chester Keltner. Illustrated in his book "How to Make Money in Commodities"

Keltner Bands are based on ATR trading indicator, the bands use ATR values to plot the band lines.

These Bands form Channels which help to spot the forex market trends using this volatility channel.

Keltner Bands Indicator - Keltner Bands Technical Analysis on Forex Charts

Keltner Channels

Construction

Keltner Channels are similar to Bollinger Bands except for the fact that Bollinger Band use standard deviation method to identify volatility and to plot the bands.

For keltner bands channels instead of using standard deviation, the average true range (ATR) = measure of volatility is used.

This indicator is an n number of periods exponential Moving Average of the closing price. These bands are developed by

Adding (for the upper line) and

Subtracting (for lower line)

An (n-period simple Moving Average of an n-period ATR) * an ATR multiplier.

Forex Analysis & How to Generate Signals

This indicator can be traded and transacted in much the same way as a Bollinger Bands.

Continuation Signals

When price moves outside the bands then a continuation of current market trend is implied. A buy signal is when the channels are moving upward & sell trading signal is when the channels are heading downwards

Keltner Bands Indicator Continuation Buy Sell Trading Signals - How to Use Keltner Bands Indicator in Forex Chart

Continuation Buy and Sell Trade Signals

Reversal Signals - Double Top and Double Bottoms Setups

Tops and Bottoms made outside the bands followed by tops & bottoms made inside the Keltner channels and bands indicate signal for reversals in the market trend.

Keltner Bands Indicator Reversal Signals - Keltner Bands Technical Indicator

Reversal Signals

Ranging Currency Markets

In ranging markets a move which originates from one Keltner band/channel tends to go and move all the way to the other band.

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