Keltner Channels KC Definition & Meaning | Technical Indicator | CSIMarket
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Glossary

Keltner Channels KC

Technical Indicator

Keltner Channels (KC) is a technical indicator used in technical analysis to determine the trend and volatility of a security. It is a combination of two other indicators, Bollinger Bands and moving averages.

Keltner Channels consist of three lines. The middle line is the Exponential Moving Average (EMA) of the closing prices of the security being analyzed. The upper and lower lines are calculated by adding and subtracting a multiple of the Average True Range (ATR) from the EMA.

The ATR measures the volatility of the security. It calculates the average range between the high and low prices of a security over a set period of time. The ATR is then multiplied by a factor, usually between 1.5 and 2.0, to determine the upper and lower lines of the Keltner Channels.

When the price of the security moves beyond the upper or lower lines of the Keltner Channels, it is considered to be outside of the normal trading range and may indicate a potential trend reversal. Traders will often use Keltner Channels in conjunction with other technical indicators to confirm their analysis and make trading decisions.

The formula for calculating Keltner Channels is as follows:

Middle Line = EMA of closing prices
Upper Line = Middle Line + (ATR x Factor)
Lower Line = Middle Line - (ATR x Factor)




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