Keltner channels are volatility-based bands that are placed on either side of an asset’s price and can help determine the direction of a trend.
The exponential moving average (EMA) of the Keltner channel is usually 20 periods, although it can be adjusted if desired.
The upper and lower bands are usually set to twice the average true range (ATR) above and below the EMA, although the multiplier can also be adjusted to personal preference.
Price reaching the upper band of the Keltner channel is bullish and reaching the lower band is bearish.
The angle of the Keltner channel also helps determine the direction of the trend. The price can also fluctuate between the upper and lower bands of the Keltner channel, which can be interpreted as resistance and support levels.