Keltner Channel Complete Explanation + Differences from Bollinger Bands

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What is Keltner Channel?

Keltner Channel

Keltner Channel is a volatility channel indicator that combines EMA (exponential moving average) and ATR (average amplitude).

Center line = EMA 20 
Top Channel = EMA 20 + (2 × ATR 10) 
Bottom channel = EMA 20 - (2 × ATR 10)

Similar to Bollinger Bands, but uses ATR** instead of **standard deviation.

Keltner Channel vs. Bollinger Band

Compare	Keltner Channel	Bollinger Band
center line	EMA	SMA
band calculation	ATR	standard deviation
movement	softer	more sensitive
Squeeze	Less shrinkage	More shrink
fake signal	Less	many

Bollinger Bands are more sensitive to price distribution, and Keltner Channels are more stable.

Bollinger Band + Keltner Squeeze (TTM Squeeze)

This is the most powerful use.

TTM Squeeze Conditions: 
When the Bollinger Band fully enters the Keltner Channel

= Extremely low volatility 
= A powerful explosion is imminent

Visual: 
- Squeeze when the Bollinger Band (green) is inside the Keltner Channel (red) 
- When the Bollinger Band goes out of the Keltner Channel, the explosion begins.

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Keltner Channel Trading Strategy

Strategy 1: Channel bottom rebound (bull market)

Uptrend + price adjusts to the lower channel 
→ A reversal candle appears in the bottom channel 
→ Long entry

Stop Loss: Bottom channel breakout closing price 
Target: Centerline (EMA) or upper channel

Strategy 2: Breaking the TTM Squeeze

Squeeze section: Bollinger Band is inside Keltner Channel 
Explosive signal: Bollinger Bands come out of the Keltner channel and determine direction.

Entry: Breakout bar close 
Stop Loss: Opposite the Keltner Channel Centerline

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