This MT4 indicator will calculate the Keltner channel and display it on the chart in a chosen color. It will also create an alert whenever the price crosses over the channel. This provides a way to trade price breaks that occur as the market crosses down through or up through one of the Keltner bands. It also lets you trade support and resistance.
Keltner bands measure range and deviation of the market from a central axis line. They’re similar to the Bollinger band. The main difference is that the Keltner channel, made up of a lower and upper band, is formed from the Average True Range (ATR).
Trading Keltner Bands
There are various strategies for trading Keltner bands. The range trading school of thought treats the bands as areas of support or resistance. Meanwhile the breakout approach trades on breaches of the bands by treating these events as bullish or bearish breakouts in the direction of strength. That means going long when the upper band is breached and going short when the lower band is breached.
The indicator inputs are as follows:
Keltner period: The averaging window size for the Keltner channel
Keltner SD: The channel standard deviation (band size)
Maximum history bars: Reduce computation time by ignoring history
Alerts: Option to create an alert when price crosses a Keltner boundary line
Cross threshold: Threshold at which line touch is considered a crossing (in points)
Line color 1: Keltner main line color
Line color 2: Keltner upper line color
Line color 3: Keltner lower line color