Volatility indicator
Keltner Channels
ATR-based bands around an EMA for trend and breakout trading.
What is Keltner Channels?
Keltner Channels plot an EMA with upper and lower bands set an ATR-multiple away. Because they use ATR rather than standard deviation (as Bollinger Bands do), they tend to be smoother and are popular for trend-pullback and breakout strategies.
How it works
The middle line is an EMA; the bands sit a multiple of ATR above and below. Price riding the upper band signals a strong uptrend; pullbacks to the EMA offer trend entries. A close outside the channel can mark a breakout. They are often paired with Bollinger Bands to spot squeezes.
How traders use it
- ▸Trend pullbacks: buy dips to the EMA in an uptrend.
- ▸Breakouts: trade closes outside the channel.
- ▸Squeeze: Bollinger Bands inside Keltner Channels marks compression.
- ▸Trailing reference: the band or EMA as a dynamic stop.
Build Keltner Channels without code in Algovex
Keltner Channels are a node in Algovex with EMA and band outputs, build pullback or breakout rules, backtest, and export. No code required.
Key parameters
| Parameter | What it does |
|---|---|
| length | EMA period for the midline (commonly 20). |
| atrLength | ATR period for band width. |
| mult | ATR multiplier for the bands (commonly 2). |
Frequently asked questions
What is the difference between Keltner Channels and Bollinger Bands?
Both are volatility bands, but Bollinger Bands use standard deviation while Keltner Channels use ATR, making Keltner bands smoother. When Bollinger Bands contract inside Keltner Channels, it signals a volatility squeeze. Algovex provides both.