Keltner Bands Technical Analysis and Keltner Bands Signals
Developed 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 indicator values/readings to plot the band lines.
These Bands form Channels which help to spot the forex market trends using this volatility channel.
Keltner Channels
Construction
Keltner Channels are similar to Bollinger Band except for the fact that Bollinger Bands use standard deviation method to identify volatility & 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.
FX Analysis and How to Generate Trading 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
Continuation Buy & Sell Trade Signals
Reversal Signals - Double Top and Double Bottoms Setups
Tops and Bottoms made outside the bands followed by tops and bottoms made inside the Keltner channels and bands indicate signal for reversals in the market trend.
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.
Study More Tutorials & Topics:
- Lesson Tutorial to Trade HANGSENG 50 Indices
- Forex Plan Tips and Forex Brokers Tips
- Trading FX System Tips & Forex System Rules for Your FX Systems
- Ichimoku Forex Trading Buy Sell Trade Signal
- How to Add Trade Keltner Bands Indicator in Trade Chart
- RSI Trading FX Strategies
