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Trading and Investment Terms

Keltner Channel

Keltner Channels are a trend following indicator used to identify reversals with channel breakouts and channel direction.

 

Keltner Channels were introduced by Chester Keltner in the 1960s, but the indicator was updated by Linda Bradford Raschke in the 1980s. 

 

Keltner Channels are a combination of two other indicators: 

  • The exponential moving average (EMA) 
  • The average true range (ATR).

The Keltner Channel help identify overbought and oversold levels relative to a moving average, especially when the trend is flat.

It can also provide clues for new trends.

 

Keltner Channels show the area where a currency pair normally hangs out.

The channel top typically holds as dynamic resistance while the channel bottom serves as a dynamic support

 

  • In an UPTREND, the price action tends to be confined in the UPPER HALF of the channel, which is between the middle line as support and the top line as resistance.
  • In a DOWNTREND, price action usually hangs around the BOTTOM HALF of the channel, finding resistance at the middle line and support at the bottom line

 

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