Reverse Keltner Channel Entries Filtered by ADX

Summary

This script pairs Keltner Channels with an ADX filter to define reversal-style entries. A long is opened when price crosses back above the lower channel, and a short when price crosses below the upper channel. The channel is built from an exponential moving average and an ATR-based width. For each position, the opposite channel is the profit-taking limit, while a stop is placed using a configurable fraction of channel width.

The ADX setting can restrict entries to weaker trends or stronger trends, with the threshold and filter direction configurable. The published material provides source logic and indicator settings, but no performance results, market, or backtest evidence. The source is truncated near its end, so some later behavior cannot be assessed. Channel reversals and ADX filtering are parameter-sensitive, and the document does not show how the rules perform after costs or across different markets.

Key ideas

• Keltner Channels use an EMA centerline and ATR-scaled upper and lower boundaries.
• A long entry follows a cross back above the lower channel, while a short follows a cross below the upper channel.
• The opposing channel is used as a limit exit, with a stop based on a fraction of channel width.
• ADX can filter entries for either weak or strong trend conditions, but no test results are supplied.

Tags

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