Keltner Channel

This is an indicator of Moomoo trading software.

This volatility-based indicator uses EMA + ATR bands to track trends and reversals:

Middle Line (ML): 20-day EMA, showing the core trend direction.
Upper/Lower Bands (UB/LB): ML ± 2×ATR (Average True Range), adjusting channel width based on market volatility.
Key Functions:
- Trend Following: Price breaking outside bands signals trend acceleration.
- Overbought/Oversold: Price bouncing between bands suggests potential reversals.
- Reversal Alert: Price returning inside after a breakout indicates weakening momentum.

Trading Rules

Scenario	Signal	Action
Trend strengthening	Price breaks through the upper track (UB) and maintains	Go long/hold when price breaks above UB
Trend reversal	Price falls below the lower track (LB) and then returns to the channel	Take profit if price re-enters channel from below
Range oscillation	Price repeatedly touches UB/LB in the channel	Trade reversals at UB/LB with caution
Channel narrowing	The distance between UB and LB continues to narrow	Prepare for volatility surge

Key Advantages

① Dynamic: ATR adapts to changing volatility
② Versatile: Works in trends and ranges
③ Visual: Cleanly marks support/resistance levels

For Beginners

In trends: Follow the breakout direction
In ranges: Use RSI/MACD to filter false signals

Operation instructions

Learn to verify the power of this indicator through the historical K-line indicator charts of the following two stocks PLTR and CLS.

Let’s take a look at this indicator formula:

ML:EMA(CLOSE,20),COLOR96C3D9,LINETHICK2;
TR1:=MAX(MAX((HIGH-LOW),ABS(REF(CLOSE,1)-HIGH)),ABS(REF(CLOSE,1)-LOW));
ATR1:=MA(TR1,14);
UB:ML+2*ATR1,COLOR96C3D9,LINETHICK2;
LB:ML-2*ATR1,COLOR96C3D9,LINETHICK2;