Keltner Bands Indices Technical Analysis & Keltner Bands Signals

Created and Developed by Chester Keltner. Described in his book "How to Make Money in Commodities"

Keltner Bands are based on ATR indicator, the bands use ATR indicator values to draw the bands lines.

These Bands form Channels that help to spot the Indices market trends using this volatility channel.

Keltner Channels

Construction

Keltner Channels are similar to Bollinger Band except for the fact that Bollinger Band use standard deviation technique/method to determine market volatility and to draw the bands.

For the keltner channels instead of using standard deviation, the average true range - ATR measure of the market volatility is used.

This stock indicator is an n number of periods exponential moving average of the closing price. These channels are developed & created 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.

Technical Analysis & How to Generate Trading Signals

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

Continuation Trading Signals

When price moves & heads outside the bands then a continuation of the present trend is implied. A buy stock signal is when the channels are moving upwards and sell stock signal is when the channels are going downwards

Continuation Buy Sell Signals

Reversal Indices Signals - Double Top & Double Bottom

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

Reversal Trading Signals

Ranging Indices Markets

In range markets a move that originates and starts from one Keltner channel will tend to go all the way to reach the other band.

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