The trading technique presented by Chester Keltner is based on this trader's clear preference for short-term trading techniques based on volatility.

To build the Keltner Channel, the ten-day moving average of the typical price is calculated, which in turn is obtained from the maximum, minimum and closing average; secondly, oscillation bands are built on both sides, formed by the ten-day moving average of the highs and lows.

The operational recommendation is to buy at the breaking of the upper band and to sell at the breaking of the lower band. The system is always on the market (stop-and-reverse), in other words, the long purchase is also valid as a guarantee of the short positions previously entered into, just as the sale is aimed at closing the long positions and in the same time opening short ones.

Formula:

Middle line = SMA( ( Close + High + Low ) / 3, Param1 )

Upper channel line = SMA( High , Param2 )

Lower channel line = SMA( Low , Param3 )

Where:

SMA = Simple Moving Average