The Keltner Channel is a volatility-based technical indicator used in market analysis. It consists of three lines: a central line, which is typically an Exponential Moving Average (EMA) of the closing prices, and two outer lines that are placed above and below the central line at a distance determined by the Average True Range (ATR), a measure of market volatility.
The Keltner Channel helps traders identify potential overbought or oversold conditions, as well as trend direction. When the price moves above the upper channel, it may indicate an overbought condition, suggesting a possible sell signal.
Conversely, when the price moves below the lower channel, it may indicate an oversold condition, suggesting a possible buy signal.
Traders often use the Keltner Channel in conjunction with other indicators and patterns to make more informed trading decisions.
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