Hello, traders!
So many times I’ve tell you how important volatility detection is. Both for your strategy and coin screener. In this term, I decide to extend your pool of volatility detectors and today we’ll speak about Keltner Channels.
Keltner Channels are volatility-based bands that are placed on either side of an coins’ price and can aid in determining the direction of a trend. The Keltner Channel is a volatility-based technical indicator composed of three separate lines. The middle line is an exponential moving average (EMA) of the price. Additional lines are placed above and below the EMA. The upper band is typically set two times the ATR above the EMA, and the lower band is typically set two times the ATR below the EMA. The bands expand and contract as volatility (measured by ATR) expands and contracts.
This is one of the most multifunctional tools I’ve ever used. I’ll try to give you the complete description of all functions, but it seems that they are much more.
• The angle of the channel helps to identify trend direction.
• A price move above the upper band shows price strength (uptrend)
• A drop below the lower band shows price weakness (downtrend)
• If the price is continually hitting the upper band, but not the lower, when the price does finally reach the lower band it could be a sign that the uptrend is losing momentum.
• If the price is constantly hitting the lower band, but not the upper, when the price does finally reach the upper band it could be a signal that the downtrend is near an end.
• The price may also oscillate between the upper and lower bands. In cases like these, traders may use the bands as support and resistance. They may look to buy when the price reaches the lower band and then starts to move higher again and may look to sell or short after the price starts to fall again after reaching the upper band.
• After a sideways period, if the price breaks above or below the channel and the channel starts to angle the same way, that may signal that a new trend is underway in that breakout direction.
As you can see guys, this tools could be very useful on any strategy. Moreover, many traders use it in algorithmic trading. It means that it’s very useful and easy to interpret.
So many times I’ve tell you how important volatility detection is. Both for your strategy and coin screener. In this term, I decide to extend your pool of volatility detectors and today we’ll speak about Keltner Channels.
Keltner Channels are volatility-based bands that are placed on either side of an coins’ price and can aid in determining the direction of a trend. The Keltner Channel is a volatility-based technical indicator composed of three separate lines. The middle line is an exponential moving average (EMA) of the price. Additional lines are placed above and below the EMA. The upper band is typically set two times the ATR above the EMA, and the lower band is typically set two times the ATR below the EMA. The bands expand and contract as volatility (measured by ATR) expands and contracts.
This is one of the most multifunctional tools I’ve ever used. I’ll try to give you the complete description of all functions, but it seems that they are much more.
• The angle of the channel helps to identify trend direction.
• A price move above the upper band shows price strength (uptrend)
• A drop below the lower band shows price weakness (downtrend)
• If the price is continually hitting the upper band, but not the lower, when the price does finally reach the lower band it could be a sign that the uptrend is losing momentum.
• If the price is constantly hitting the lower band, but not the upper, when the price does finally reach the upper band it could be a signal that the downtrend is near an end.
• The price may also oscillate between the upper and lower bands. In cases like these, traders may use the bands as support and resistance. They may look to buy when the price reaches the lower band and then starts to move higher again and may look to sell or short after the price starts to fall again after reaching the upper band.
• After a sideways period, if the price breaks above or below the channel and the channel starts to angle the same way, that may signal that a new trend is underway in that breakout direction.
As you can see guys, this tools could be very useful on any strategy. Moreover, many traders use it in algorithmic trading. It means that it’s very useful and easy to interpret.
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