Keltner Channel
A volatility envelope around an exponential moving average, with bands set by the Average True Range.
In plain English
A volatility envelope around an exponential moving average, with bands set by the Average True Range.
A Keltner channel draws a middle line, usually an EMA, with upper and lower bands a multiple of the ATR away. It is named after Chester Keltner, and the modern form was popularised by Linda Bradford Raschke.
Price closing outside the bands can signal a strong trend; returns to the middle can be pullback opportunities. It is often compared with Bollinger Bands, which use standard deviation instead.
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