What it measures
Keltner Channels are a volatility envelope like Bollinger Bands, but the width comes from the average true range instead of the standard deviation of price. Because ATR changes more slowly than price-based deviation, Keltner bands are smoother and do not balloon in trends the way Bollinger Bands do.
The calculation
The modern (Linda Raschke) version:
middle = EMA(close, 20) upper = middle + multiplier × ATR(10) lower = middle − multiplier × ATR(10)
Chester Keltner's 1960 original used a 10-day SMA of typical price and the average high-low range; almost every chart today uses the EMA and ATR version.
Inputs and defaults
- Length: 20 for the EMA.
- Multiplier: 2 (TradingView's default) or 1.5.
- ATR length: 10.
How it is read
A close outside the channel is read as a strong move worth following; a return to the middle line as the pullback to buy in a trend. The squeeze setup compares the two envelopes: when the Bollinger Bands fit inside the Keltner Channels, volatility is unusually low and a breakout is expected.
Where it fails
Smoother bands mean fewer signals and later ones: Keltner breakouts confirm after a move is under way. The channel inherits ATR's slowness after a shock, staying wide when the market has already calmed. The squeeze tells you a move is likely, not its direction, and half the resolutions go the wrong way for whoever guessed.
How the desk reads it
A Keltner rule is read as a trend rule with a volatility gate and judged by the same two numbers as any other: trade count and drawdown in the sideways months. The squeeze setup is read on its false starts, which are half of its signals by construction.
In the desk's screen
Of the 614 screened strategies in the library, 5 (0.8%) use this indicator somewhere in their logic.
3 of those were gross-profitable on enough cells to reach the after-fee replay.
- BB Breakout + Momentum Squeeze [Strategy] Breakout · after-fee replay
- Dual Keltner Channels Strategy [Eastgate3194] Breakout · after-fee replay
- My strategy Breakout · after-fee replay
- Concordance Strategy [JOAT] Chart turning points
- Momentum + Keltner Stochastic Combo) A gauge with a line
The count is read from the compiled code of each strategy in the library; a strategy that computes the indicator by hand under another name is not counted. The desk's own rules are not part of the count.