Keltner Channels

Keltner Channels are a volatility-based indicator made of three lines: a central exponential moving average plus an upper and a lower band placed a multiple of the Average True Range above and below it. Because the bands come from ATR rather than standard deviation, this volatility channel is usually smoother than Bollinger Bands and reacts to sustained range expansion more than to single spikes. Traders use the middle line as a trend reference and the outer bands as dynamic support and resistance: closes outside the upper band can signal trend strength rather than an immediate reversal, while a move back inside the channel is often read as momentum fading. Changing the moving-average length or the ATR multiplier makes the channel tighter or looser.