How to use the Keltner Channel ๐
The Keltner Channel is a volatility-based trading indicator that provides key insights into trend direction and volatility.
๐ There are three lines: A central moving average, usually an exponential moving average (EMA), and two outer bands that are above and below the central line, usually a multiple of the price's average true range (ATR).
๐ When the price breaks above the upper band, it indicates that an uptrend may be starting, suggesting a buying opportunity.
๐ When the price breaks below the lower band, it may indicate a downward trend, suggesting a short opportunity.
โ๏ธ The price may also oscillate between the upper and lower bands. In such cases, traders can use the bands as support and resistance.
๐ If the price frequently touches or breaches the bands, followed by reversals, this may signal that a trend reversal is imminent.
๐ A move outside the bands may confirm the trend direction set by other analysis tools.
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