Keltner channels compare today’s prices with yesterday’s prices. An absence of new highs indicates a downtrend. An absence of new lows indicates an uptrend.
In conjunction with this method of trend identification, the Minor-Trend Rule is used. The Minor Trend Rule states that the minor trend is bullish if the daily trend sells above its most recent high; conversely, the minor trend is bearish if the daily trend sells below its most recent low.
The Keltner channel study consists of a moving average (center line, CL) and two channel lines (band, BND). The channel lines are drawn by adding to and subtracting from the current moving average value the product of a constant (percent/100.0) multiplied by the average true range of each bar.
Keltner Channel Parameters
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Parameter |
Description |
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Display |
Opens sub-window to set parameters •Color = Line color. •Weight = Line thickness. •MarkIt = Opens Specify Conditions window. •Display = Line style: line or histogram. •ShareScale = Determines whether sharing of the vertical scales between studies is accepted. Auto = System determine whether sharing is feasible. On = Scale is shared regardless of the functions and studies displayed. Off = Scale is not shared. ShareScale must be On if study is overlaid on a study with multiple outputs. |
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Offset |
Distance in bars between the current bar and the bar to use in the calculation. A positive offset uses future bars. A negative offset uses past bars. For example: 1 = next bar -2 = two bars back from current bar |
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Type |
Moving average calculation. Values: •Simple •Smoothed •Exponential •Weighted •Centered •Median •Trix •Exponential Hull |
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Period |
Number of bars in the lookback range. |
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Price |
Price used to calculate study values. |
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Percent |
Percentage factor added to, or subtracted from, the average true range of each bar to derive the channel lines. Applies only to BND. |