What is the Keltner Channels Indicator?

The Keltner Channels is a technical analysis tool used to identify trends, volatility, and entry and exit points in financial markets.

How does the Keltner Channels work?

This indicator combines the Exponential Moving Average (EMA) and the Average True Range (ATR) to create a channel around the price, which acts as dynamic support and resistance levels.

What is the difference between the Keltner Channels and Bollinger Bands?

The Keltner Channel uses the ATR to calculate the distance between the lines in trending charts. In contrast, Bollinger Bands uses the Standard Deviation and performs better in identifying overbought and oversold conditions in range-bound markets.

What role does the Exponential Moving Average (EMA) play in the Keltner Channels indicator?

The EMA forms the middle line of the indicator and acts as the main reference for determining the upper and lower bands. This line shows the overall trend direction.

Is the Keltner Channels suitable for short-term trading (Scalping)?

Yes, but you need to adjust the EMA period and ATR multiplier for short-term volatility and use it in lower timeframes (three and five minutes).

Can the Keltner Channels show overbought and oversold levels?

Not directly, but the price approaching the upper band may indicate buying pressure and approaching the lower band may indicate selling pressure.

What are the best settings for the Keltner Channels?

Typically, an EMA with a period of 20 and an ATR of 10 to 14 are used. However, you can adjust these values depending on the market and strategy.

When should the ATR multiplier be changed?

The ATR multiplier should be increased in highly volatile markets, and in low-volatility markets, it should be decreased.

Can the Keltner Channels be combined with other indicators?

Yes, the Keltner Channels works well with indicators such as RSI and MACD.

Is the Keltner Channels more effective in forex, stocks, or crypto trading?

The Keltner Channel is versatile and can be used in all markets, but it performs best in assets with clear trends and sufficient liquidity.

Does the Keltner Channels work better in lower or higher timeframes?

It depends on the strategy; short-term traders use it in lower timeframes for quick trades, while long-term traders rely on higher timeframes for trend analysis.

how to use keltner channels indicator?

Traders use the Keltner Channel Indicator to identify breakouts, trend strength, and dynamic support and resistance zones.

Is Keltner Channel better than Bollinger Bands?

The Keltner Channel uses ATR for volatility, making it smoother and less reactive to noise compared to Bollinger Bands.

Can Keltner Channels be used on all timeframes?

Yes, they can be applied from intraday charts to higher timeframes, though settings should be optimized per timeframe.

What is the best setting for the Keltner Channel?

Common Keltner Channel settings are EMA 20 and ATR 10–14, but they should be adjusted based on the market and strategy.

Do Keltner Channels repaint?

No, the Keltner Channel does not repaint; its bands are based on fixed EMA and ATR values.

What is the best indicator to use with the Keltner Channels?

Common confirmations include RSI, MACD, or volume indicators, often combined in bollinger bands and keltner channel strategy comparisons.

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Keltner Channels (KC) Definition + Signals & Analysis

Keltner Channels (KC) Definition + Signals & Analysis

Categories:

Forex Education Indicators Education Trading Strategies Education Technical analysis Education

Article Level:

Intermediate

Writer:

Rajesh Sharma

Reviewer:

Davit Kvaratskhelia

Fact checker:

Sinan Aydın

Modified:Oct 11, 2025

Comments:0

15 Min

The Keltner Channel Indicator (KC) is constructed using the Exponential Moving Average (EMA) as the middle line, with the channel bands positioned based on the Average True Range (ATR).

This structure allows traders to observe suitable price movement ranges and analyze trend strength changes through band touches or keltner channel breakout signals.

The three main parts of this indicator; Basis Line, Upper Band, and Lower Band; not only show the overall market direction but also provide the ability to evaluate structural breakouts and volatility levels.

For this reason, in analyses that require volatility assessment, trend examination, and dynamic support and resistance levels, the Keltner Channel strategy has a special place.

Introduction to the Keltner Channels Indicator

The Keltner channels technical indicator combines the Exponential Moving Average (EMA) and the Average True Range (ATR) to create a channels consisting of three parts around the price.

This channels displays the movements of the chart within a specific framework. Components of the Keltner Channels Indicator:

Middle Line (Basis Line): This line is the core of the indicator and shows the overall price trend based on the EMA 20;
Upper Line (Upper Band): This line acts as a dynamic resistance level; if the price crosses this line, a bullish signal is generated;
Lower Line (Lower Band): This line acts as a dynamic support level; a bearish signal is generated if the price crosses this line.

History and Development of the Keltner Channel Indicator

According to information provided by CIF, the Keltner Channel Tutorial dates back to the 1960s when it was first introduced by Chester W. Keltner.

The original version was based on the Simple Moving Average (SMA) and price range, primarily used to follow dominant market trends.

In the 1980s, Linda Bradford Raschke revised this tool by replacing the SMA with the EMA and integrating the ATR, which shaped the modern Keltner Channels chart.

This update enhanced the precision of volatility measurement and allowed traders to identify both ranging and trending conditions with greater clarity.

The history of this indicator highlights how its evolution responded to the market’s need for deeper insight into price behavior and volatility.

Introduction of the Keltner Channel Indicator on corporatefinanceinstitute.com — Introduction of the Keltner Channel Indicator on The Keltner Channel Indicator was created in 1960 by Chester Keltner; Source: corporatefinanceinstitute.com

Installing and Setting Up the Keltner Channel Indicator on Platforms

To use the Keltner Channel Indicator and strategies, simply activate it from the indicators section of trading platforms such as MetaTrader 4 , MetaTrader 5, or Trading View.

Once added to the chart, the default Keltner Channel settings; including EMA period and ATR multiplier; are displayed.

Adding the Keltner Channel in MetaTrader 4

To install and activate the Keltner Channel indicator in MetaTrader 4, you need to follow a specific path, which is outlined step by step below:

Download the indicator: Obtain the file with .ex4 or .mq4 extension from a trusted source;
Open the Data Folder: In MetaTrader 4, click File; Open Data Folder;
Locate the Indicators folder: Navigate to MQL4, Indicators;
Copy the file: Place the indicator file inside the folder;
Restart MetaTrader: Reopen the platform so the system detects it;
Find in Navigator: Under Indicators, the name should appear;
Apply to chart: Double-click or drag it onto a chart;
Adjust settings: Customize EMA or ATR values, enable Allow DLL import, and click OK.

Adding the Keltner Channel in MetaTrader 5

To add the Keltner Channel indicator in MetaTrader 5, the process is more straightforward and can be done directly from the Indicators section:

Open a chart for the asset
Go to Indicators: Click Insert, Indicators
Search “Keltner Channel (KC)”
Select and plot on the chart
Modify settings (optional): Adjust EMA and ATR values
Click OK to confirm

Adding the Keltner Channel in TradingView

On the Trading View platform, the Keltner Channel indicator can be easily searched and added through the Indicators section.

Steps to add the Keltner Channel indicator in TradingView:

Open a chart of your chosen asset
Click Indicators (fx) on the top toolbar
Search “Keltner Channel”
Select and add to chart
Open settings: Edit EMA, ATR multiplier, or colors of keltner channel bands

How to Calculate the Keltner Channel Indicator (KC)

The Keltner Channel (KC) indicator is calculated using the values of the Exponential Moving Average (EMA) and the Average True Range (ATR).

The Exponential Moving Average (EMA) usually varies between a 15- to 40-day period (depending on the trading strategy).

The Upper Band of the channel is placed at twice the Average True Range (ATR) above the EMA; the Lower Band is set at twice the ATR below the EMA.

Calculating the Exponential Moving Average (EMA)

To calculate the Exponential Moving Average, the time period must first be defined, and then for each average, the data is computed on the price chart.

At the very first point on the chart, the EMA equals the initial price of the chart; the subsequent EMA values are calculated using the following formula:

\text{New EMA} = (\text{New Price} - \text{Previous EMA}) \times \left(\frac{2}{\text{Period} + 1}\right) + \text{Previous EMA}

Calculating the Average True Range (ATR)

The calculation of this range is done by examining the changes between the highest and lowest prices within a defined period (for example, 10 days); this range is calculated for each point on the price chart.

Calculating the Keltner Channel Lines

The Keltner Channel lines are calculated using the data from the Exponential Moving Average (EMA) and the Average True Range (ATR):

\text{Upper Band} = \text{EMA}_{\text{(defined period)}} + (\text{ATR} \times 2)

\textbf{Lower Band} = EMA - (2 \times ATR)

\text{Lower Band} = \text{EMA}_{\text{(defined period)}} - (\text{ATR} \times 2)

Advantages and Disadvantages of the Keltner Channels

To optimally use the Keltner channels technical indicator, it is essential to understand its advantages and disadvantages. Advantages and Disadvantages of the Keltner Channels:

Disadvantages	Advantages
Poor Performance in Range-Bound and Low-Volatility Markets	Combines Trend Information (EMA) and Volatility (ATR) for Accurate Signals
Requires Proper Parameter Adjustment	More Stable than Bollinger Bands in Volatile Conditions
Does Not Provide Clear Signals for Overbought or Oversold Conditions	Capable of Identifying Strong Trends and Entry/Exit Points
Slow Reaction to Sudden Price Changes	Reduces Price Noise Compared to Similar Indicators

Applications of the Keltner Channels

The Keltner Channels Indicator uses the Exponential Moving Average (EMA) and the Average True Range (ATR) to identify trends, breakout signals, and entry points.

On the Mind Math Money YouTube channel, a tutorial explains How to trade using the Keltner Channel (KC) in technical analysis.

Using the Keltner Channels Technical Indicator to Identify Trends

One of the primary uses of the Keltner Channels is to identify the current price trend; this is determined by the price's interaction with the lines and movement within the channels.

Uptrend: When the price moves between the Basis Band and the Upper Band, the middle line acts as a dynamic support level in an uptrend;

Uptrend in the Keltner Channels — Identifying an uptrend by examining the price movement between the Kelter Channels Indicator lines

Downtrend: When the price moves between the Basis Band and the Lower Band, the middle line acts as a dynamic resistance in a downtrend;

Downtrend in the Keltner Channels — Identifying a downtrend by examining the price movement between the Keltner Channels lines

Range-bound Market: When the price fluctuates within the range, the middle line is often broken, while the upper and lower lines act as resistance and support.

Note: To make easy use of the Keltner Channels, you can use the TradingFinder indicator set.

Range-bound Market in the Keltner Channels — Identifying a range-bound market using the Keltner Channels indicator

Receiving Breakout Signals Using the Keltner Channels Technical Indicator

Depending on the market's bullish or bearish structure, the method of identifying breakouts using the Keltner Channel changes.

Bullish Breakout: When the Upper Band is broken with increased volume and strong candles, a bullish breakout signal is generated;

Breakout in the Keltner Channel — A strong breakout of the upper line will generate a bullish breakout signal

Bearish Breakout: When the Lower Band is broken with strong candles and increased market volume, a bearish breakout signal is generated.

Breakout in the Keltner Channels — A strong breakout of the lower line will generate a bearish breakout signal

Applications of the Keltner Channel in Different Markets

The Keltner Channel forex, stock, and crypto applications vary because each market has unique volatility and price action.

The best Keltner Channel strategy depend on adapting the parameters to market conditions.

Market	Functional Features of the Keltner Channel	Suggested Settings
Forex	Identifying valid breakout confirmation and short-term (scalping) trades	Shorter EMA (10–20), standard ATR
Stocks	Combine with trading volume to detect overbought/oversold	Medium-term EMA (20–50), balanced ATR
Cryptocurrency	Adjust to high volatility and sharp moves	Flexible EMA, ATR with larger multiplier (2.5 or 3)

Trading with the Keltner Channel

The Keltner channels technical indicator uses the concepts of Exponential Moving Average (EMA) and Average True Range (ATR) to identify entry points, exit points, and stop-loss levels.

Example of Long Position Trading Using the Keltner Channels Technical Indicator

Entry: Happens after the Basis Band or Upper Band is broken by a strong candle and increased market volume;
Stop Loss: The stop-loss order is located below the Basis Band or Lower Band.

Exit: A break below the middle line is the first exit signal; approaching and testing the lower line is the next.

Long Position Trading Using the Keltner Channels — Identifying entry, exit, and stop-loss points for a long position using the Keltner Channels

Example of Short Position Trading Using the Keltner Channels Technical Indicator

Entry: Occurs after the Basis Band or Lower Band is broken by a strong candle and increased market volume;
Stop Loss: The stop-loss order is placed above the Basis Band or Upper Band.

Exit: A break above the middle line is the first exit signal; approaching and testing the upper line is the next.

Short Position Trading Using the Keltner Channels — Identifying entry, exit, and stop-loss points for a short position using the Keltner Channels

Differences Between bollinger bands andkeltner channel strategy

The Keltner Channels has many similarities with the Bollinger Bands; however, they differ in calculation methods, signaling, and trading applications. Comparison of the Keltner Channel vs Bollinger Bands:

Parameter	Keltner Channels	Bollinger Bands
Moving Average	Exponential Moving Average (EMA)	Simple Moving Average (SMA)
Volatility Measure	Average True Range (ATR)	Standard Deviation
Sensitivity to Market Volatility	Moderate	Highly Sensitive
Performance in Range-bound Markets	Weak	Good
Primary Application	Identifying trends and breakout points	Identifying volatility and overbought/oversold levels

Common Mistakes When Using the Keltner Channel

Even though Keltner Channel Wedges and bands are accurate in measuring volatility, mistakes reduce efficiency:

Not combining indicators: Avoid relying only on KC; combine with RSI or MACD;
Fixed parameters: Using EMA 20 and ATR 14 everywhere instead of adjusting;
Ignoring volatility: Leads to false Keltner Channel breakout signals in calm markets;
Overlooking conditions: Not personalizing settings per asset’s behavior.

Common mistakes when using the Keltner Channel — Ignoring market volatility reduces the success rate of trades when using the Keltner Channel Indicator strategies

Conclusion

The Keltner Channels is a flexible tool in various short-term and long-term trade strategies.

Although this indicator performs well in identifying strong trends and breakout points, it does not provide very accurate signals in range-bound and low-volatility market conditions; to filter out false signals, you can combine them with volume indicators or oscillators.

Keltner Channels Indicator – PDF

Click to download Keltner Channels Indicator – PDF

Quiz

5 Questions

Q1: What are the three components that make up the Keltner Channels indicator?

Q2: Which two technical analysis components does the Keltner Channels combine to create its structure?

Q3: In what type of market condition does the Keltner Channels indicator perform poorly?

Q4: What signal is generated when the price breaks above the Upper Band with increased volume and strong candles?

Q5: How does the Keltner Channels differ from Bollinger Bands in terms of volatility measurement?

FAQs

What is the Keltner Channels Indicator?: The Keltner Channels is a technical analysis tool used to identify trends, volatility, and entry and exit points in financial markets.
How does the Keltner Channels work?: This indicator combines the Exponential Moving Average (EMA) and the Average True Range (ATR) to create a channel around the price, which acts as dynamic support and resistance levels.
What is the difference between the Keltner Channels and Bollinger Bands?: The Keltner Channel uses the ATR to calculate the distance between the lines in trending charts. In contrast, Bollinger Bands uses the Standard Deviation and performs better in identifying overbought and oversold conditions in range-bound markets.
What role does the Exponential Moving Average (EMA) play in the Keltner Channels indicator?: The EMA forms the middle line of the indicator and acts as the main reference for determining the upper and lower bands. This line shows the overall trend direction.
Is the Keltner Channels suitable for short-term trading (Scalping)?: Yes, but you need to adjust the EMA period and ATR multiplier for short-term volatility and use it in lower timeframes (three and five minutes).
Can the Keltner Channels show overbought and oversold levels?: Not directly, but the price approaching the upper band may indicate buying pressure and approaching the lower band may indicate selling pressure.
What are the best settings for the Keltner Channels?: Typically, an EMA with a period of 20 and an ATR of 10 to 14 are used. However, you can adjust these values depending on the market and strategy.
When should the ATR multiplier be changed?: The ATR multiplier should be increased in highly volatile markets, and in low-volatility markets, it should be decreased.
Can the Keltner Channels be combined with other indicators?: Yes, the Keltner Channels works well with indicators such as RSI and MACD.
Is the Keltner Channels more effective in forex, stocks, or crypto trading?: The Keltner Channel is versatile and can be used in all markets, but it performs best in assets with clear trends and sufficient liquidity.
Does the Keltner Channels work better in lower or higher timeframes?: It depends on the strategy; short-term traders use it in lower timeframes for quick trades, while long-term traders rely on higher timeframes for trend analysis.
how to use keltner channels indicator?: Traders use the Keltner Channel Indicator to identify breakouts, trend strength, and dynamic support and resistance zones.
Is Keltner Channel better than Bollinger Bands?: The Keltner Channel uses ATR for volatility, making it smoother and less reactive to noise compared to Bollinger Bands.
Can Keltner Channels be used on all timeframes?: Yes, they can be applied from intraday charts to higher timeframes, though settings should be optimized per timeframe.
What is the best setting for the Keltner Channel?: Common Keltner Channel settings are EMA 20 and ATR 10–14, but they should be adjusted based on the market and strategy.
Do Keltner Channels repaint?: No, the Keltner Channel does not repaint; its bands are based on fixed EMA and ATR values.
What is the best indicator to use with the Keltner Channels?: Common confirmations include RSI, MACD, or volume indicators, often combined in bollinger bands and keltner channel strategy comparisons.

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