To set the Keltner Channels indicator from the section "Channel building" with settings: period 10, top line of the channel is blue, average line is gray and lower is red You should receive the result as at the pic below 2.
The chart with this indicator looks like that: Necessary conditions for opening of the transaction on Buy: 1. It is necessary for us that at least one candle was closed above the blue line of the Keltner Channels indicator; 2.
How to trade Keltner Channels?
It is necessary that the blue line of the ADX indicator went up. We wish you success.
In the following three examples, we will discuss how you can trade three different market conditions by combining a second technical indicator and build a comprehensive Keltner channel trading system. One of the best applications of Keltner channel in Forex is using the indicator to trade breakouts.
Atron with Keltner Channel - Forex Trading System | eBay
Breakouts occur when the price ends a previous consolidation and starts a new trend. However, if you only rely on the Keltner channel to trade breakouts, you may find that you are seeing a lot of false signals. The best way to trade a breakout scenario with the Keltner channel would be to combine a trend signal indicator like the Average Directional Index ADX.
However, savvy Forex traders would not merely place a BUY order at this point because the Average Directional Index indicator value Blue line was still below the reading of Many experienced Forex traders only consider a market to be trending when the Average Directional Index reading is above 20 to 25, and where the trend intensifies when the ADX indicator reading goes above 40 to 45 level.
Hence, once the Average Directional Index reading reached above the 25 level, then you could have considered placing the BUY order with your broker. The trickiest part of trading breakouts using a Keltner channel strategy is to know exactly when you should time your market entry. You should try to identify a psychological resistance level during an uptrend and a support level during a downtrend, once the following two conditions are met. On this occasion, we found the resistance to be around the 1. Aside from breakout opportunities, the Keltner channel can also provide you with retracement signals.
Trading System Rules
Moreover, if you are already in the trade, you can also use these retracement pullback opportunities to increase your position size. In figure 4, we have applied the Stochastic indicator in combination with Keltner channel to find a retracement pullback trading opportunity.
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To trade using this strategy, first, you need to wait for the price to confirm the trend by breaking above or below the upper or lower Keltner channel. Once the trend is confirmed, you should wait for the price to start a retracement and reach near the middle band of the Keltner channel, which is the period Exponential Moving Average. The price can retrace back and reach all the way to opposite Keltner channel as well at times. The key here is that the price cannot break and close on the other side of the Keltner channel, which would signal a potential reversal of the trade.
The third thing you need to watch in this pullback strategy is the Stochastic indicator reading to gauge when the market is overbought or oversold.
Effective Keltner Channel Trading Strategy
Here, the price reached near the middle band of the Keltner channel and the Stochastic indicator turned overbought, signaling a potential trend continuation to the downside. In addition to that, we also found a stochastic divergence on the price chart, which significantly improved the odds of the trade.
However, it is not necessary that you wait for a stochastic divergence to use this Keltner channel strategy. A stochastic overbought signal during a confirmed downtrend would be sufficient to confirm a potential trend continuation. The trigger for this Keltner channel pullback strategy is a price penetration below the low of the bar that signaled the stochastic overbought condition. As you can see, we have identified this particular bar with the black arrow on figure 4.
- Keltner Channels (KC) — Technical Indicators — Indicators and Signals — TradingView!
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Besides trending markets, if you are looking to trade during a range bound market, you can still utilize the Keltner channel and Average Directional Index combination. Share on:. Recommended Brokers.
Keltner Channel Indicator
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