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See the MegaTraders Keltner Channel algorithmic trading indicator
| Category: | Channel |
| No. of Plots: | 3 (herafter KHi, KC and KLo) |
| Screen Location: | Overlays bars / candlesticks |
| Plot Style(s): |
KHi - Purple dotted line KC - Purple dotted line KLo - Purple dotted line |
| Plot Significance: |
KHi - Purple dotted line (the upper channel line) KC - Purple dotted line (the centre channel line - EMA (20)) KLo - Purple dotted line (the lower channel line) |
| Details: |
The formula used on the charts pages for the Keltner Channel is a variation of Chester W. Keltner's original formula. KC is a 20 bar term Exponential Moving Average (EMA). The Keltner Channel is a useful indicator because it can show when market sentiment is at an extreme and can also allude to trend. However, this indicator does not readily give early warnings as to when a particular trend might end. The majority of the time, price will fall within the channel formed by KHi and KLo. When price bars fall completely outside the channel we have an extreme condition. However, it is not uncommon for price bars to overlap or remain outside the channel for several bars. In the absence of more sophisticated indicators, this indicator can help determine trend. Whilst price predominantly falls between KC and KHi (or above) this suggests the market is bullish. Whilst price predominantly falls between KC and KLo (or below) this suggests the market is bearish. |
| Indicator Characteristics: |
Retracements can uncannily go from one side of the channel then bounce off the other side before advancing again. |
