The Keltner Channel is a contour around the price, consisting of a centerline, a moving average (MA), and 2 upper and lower contour, formed from the ATR.

Keltner Channel can be said to be a "brother" to the Bollinger Band. Both of these 2 analysis tools place an MA in the center. The difference is that Bollinger Band uses standard deviation to calculate the upper and lower contours, the Keltner Channel uses ATR to calculate.


The Keltner Channel in the mainstream is used to catch the trend, but the Keltner Channel uses another way of doing research in a book by Adam.H.Grimes, which is used to find periods when the market has gone too far - overbought or oversold.

In general, it's kind of variation, not 100% correct as of the original way but just getting ideas from the original

The parameters to use are as follows:

After opening up the chart it looks like this

According to the original author (Mr. Grimes), he has run all kinds of backtests, even with random data, he finds somewhere around 80-85% that when prices appear free-bars (i.e. if the candles are completely out of the Keltner Channel without any part of the candle hitting the Keltner Channel), the possibility of a reversal is possible. More specifically, he said that this is when the price falls into a state of extreme, either overbought (overbought - overbought) or oversold (oversold - oversold). In such states, it is best not to trade any more since the market has gone too far. Please wait patiently for the price to return to see stars.

The Keltner Channel is generally a statistical tool for understanding the state of the market.

Use it as above, for the main trade time frame. For example, if you use the H4 chart, if the price falls outside the Keltner Channel, you won't trade in that direction anymore, but wait for the price to enter. Or, if you are more reckless, you can catch the top and catch the bottom of the price has a weakening pattern.

In general, the Keltner Channel should not be used as an entry command point, for example, if the price touches the upper edge, then sell, if the price touches the lower edge, you buy. Use it as a reference only for a market situation.

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