Keltner Channel: Definition, How It

Works, and How To Use

By CORY MITCHELL

Updated July 06, 2021

Reviewed by SOMER ANDERSON

Fact checked by MICHAEL LOGAN

What Is the Keltner Channel?

Keltner Channels are volatility-based bands that are placed on either side of
an asset's price and can aid in determining the direction of a trend.

The Keltner channel uses the average-true range (ATR) or volatility, with
breaks above or below the top and bottom barriers signaling a continuation.

KEY TAKEAWAYS
● Keltner Channels are volatility-based bands that are placed on either
side of an asset's price and can aid in determining the direction of a
trend.
● The exponential moving average (EMA) of a Keltner Channel is typically
20 periods, although this can be adjusted if desired.
● The upper and lower bands are typically set two times the average true
range (ATR) above and below the EMA, although the multiplier can also
be adjusted based on personal preference.
● Price reaching the upper Keltner Channel band is bullish, while reaching
the lower band is bearish.
● The angle of the Keltner Channel also aids in identifying the trend
direction. The price may also oscillate between the upper and lower
Keltner Channel bands, which can be interpreted as resistance and
support levels.