Keltner Channels

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Definition

Keltner Channels measure stock movement in relation to an upper and lower moving-average band. Trend followers would view a rising Keltner Channel as a positive trend, specifically when there is an overbuy (prices are above the upper band) and an oversell (prices below the lower band).

Formula

YCharts calculates it as:

Middle line = [(High + Low + Close) / 3]

Upper Channel Line = Middle Line + (Multiple x Average True Range Over Time Period)

Lower Channel Line = Middle Line - (Multiple x Average True Range Over Time Period)