Keltner Channels

Trading in cryptocurrency is one of the way to make money and there are different indicators that can be use but I will like to talk about one of the indicator which is Keltner Channel.

Keltner Channels are volatility-based indicators that can be used to determine the direction of a trend when put on either side of an asset's price.

Chester Keltner first introduced this indicator in the 1960s, with an original formula that used a high low price range and a simple moving average (SMA) to calculate the bands. However, in the 1980s, a new formula was introduced that used average true range (ATR), which is still in use today. This ATR works in conjunction with breaks placed above or below the top and bottom barriers in the chart, signaling a continuation.

The indicator is made up of three lines, with the center line representing the price's exponential moving average (EMA).

The upper and lower bands are two times the ATR of the EMA's above and below it, respectively.

As the ATR-measured volatility expands and contracts, the brand expands and contracts as well.

This is calculated using the following formulas

Middle line = Exponential Moving Average (EMA) of the price

Upper Band = EMA + (2 × ATR)

Lower Band = EMA - (2 × ATR)

Where

The Exponential Moving Average (EMA) is over 20 periods, the ATR is over 10 or 20 periods and 2 is called multiplier.

let look at how to add the indicator to your chat

Step 1: Go to tradingview and select the coin you want to trade with.

Step 2: Click on the indicators & strategies sign

Step 3: Type in the Keltner Channel on the search bar and then click on Keltner Channel

Now we have the indicator on our chat.

Advantages of Keltner Channels

1. The indicator helps in identify trend direction.
2. It helps in providing some trade signals.
3. It is very useful in analyzing the changes in price action.

Disadvantages of Keltner Channels

1. If the bands are too narrow or far apart Keltner Channels will not work.
2. The bands in Keltner Channels have little forecasting ability and may not act as resistance and support.