Keltner Channels: ATR-Based Bands and Their Historical Variants

Summary

The document outlines two forms of Keltner Channels. Chester Keltner’s original method used a ten-day simple moving average of typical price as the centerline, with a ten-day average of the high-low range added and subtracted to form the bands. A later version, associated with Linda Bradford Raschke, uses an exponential moving average of closing prices and Average True Range (ATR) to determine channel width.

The included indicator example sets the centerline from a 20-period EMA and places upper and lower bands two times a 10-period ATR above and below it. This illustrates how the modern channel adapts its width to measured volatility. The page explains the construction but provides no entry or exit rules, market examples, or performance evidence, so it does not establish that channel signals are profitable.

Key ideas

• The original Keltner method centered the channel on a ten-day simple average of typical price.
• The original bands used an average of the high-low range as their offset.
• The modern form uses an exponential moving average and ATR to set the centerline and band width.
• The example uses a 20-period EMA and a 10-period ATR multiplied by two.
• The document describes indicator construction but supplies no trading rules or performance tests.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.