**Description**

Keltner Channels is a volatility indicator. The indicator creates curves above and below a simple moving average (SMA) of the Typical Price, which is the average of the high, low, and close prices. This has a similar appearance to Bollinger Bands. However, one key difference between these indicators is that Bollinger Bands uses standard deviation of price to plot the bands, while Keltner Channels use the trading range (high price minus low price) to plot the curves.

The Keltner Channels are set a distance of the trading range above and below the SMA for the specified period. A larger trading range, usually implying higher volatility, means a wider Keltner Channel while a smaller trading range means a narrower Keltner Channel.

**Formula **

**Elements Used**

**Example parameter values**

Time Resolution: 1 hour

Threshold percentage for Keltner bands: 0.01%

Number of time periods used to compute moving average: 10

**Parameter Descriptions**

**Time Resolution**: This is the time window for each period being analyzed. If this is chosen as 1 hour, and the number of time periods to compute moving average is 10, then the indicator will analyze the market based on the past 10 1-hour periods of data. If it is instead chosen as 1 minute, then the indicator will analyze the market based on the past 10 1-minute periods of data.**Threshold percentage for Keltner bands**: When the market price moves within a given percentage of a Keltner band, this identifies a buy/sell signal. For example, if this is chosen as 0.01%, then when the market price moves within 0.01% of the lower band, this generates a buy signal, and when it moves within 0.01% of the upper band, this generates a sell signal.**Number of time periods used to compute moving average**: If the number of time periods is 10, and the Time Resolution is 1 hour, then the indicator will analyze the market based on the past 10 1-hour periods of data.

**Helpful Links**