Keltner Channel MT4 Indicator - Free MT4 Indicator

Keltner Channel MT4 Indicator – Free MT4 Indicator

The Keltner Channel MT4 Indicator is very similar to Bollinger Bands Indicator. Chester W Keltner first introduced the Keltner Channel, which he called the 10-day moving average trading rule in his 1960 book “How to make money in commodity.” Keltner Channel was intended for commodity traders, however, the same indicator can be used in predicting market moves on any other asset classes including the Forex market. The Keltner Channel uses a simple formula to calculate the channel envelopes. In order to find the average price of an instrument, Chester calculated the average price by finding the average of its high, low and closing prices over the past 10-days to form he center line and then found the 10-day average of the highest and lowest to form the bands.

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Later in 1980 Linda Raschke introduced an updated version of the Keltner Channel and instead of the average price formula used by Keltner, Linda Raschke used the exponential moving average to form the channel central line, but she also used the Average True Range (ATR) to calculate the upper and lower bands in the channel which are now at equal distance from the central line by a distance determined by a multiple of the ATR, usually 2 x ATR.

Keltner Channel MT4 IndicatorKeltner Channel MT4 Indicator

Figure 1 is an example of a chart with the Keltner Channel MT 4 indicator, which is an improved indicator as it has smoothed bands. The Keltner Channel bands will act as either support or resistance and how the currency pair tends to react very strongly once it exceeds the top band or falls through its lower band. Usually, the channel becomes tighter when the ATR is lower and conversely, it expands when the ATR is higher.

Keltner Channel MT4 Indicator Settings

Keltner Channel MT4 Indicator SettingsKeltner Channel MT4 indicator Settings

The Keltner Channel MT4 indicator has different useful settings that can be changed based on your needs and depends on your trading style. Without further ado, here is the main functionality of the Keltner Channel MT 4 indicator:

  • TimeFrame: It lets you see the same Keltner Channel structure of the time frame selected on all of the other TFs. So, if you choose 60 minutes you’ll see the same Keltner Channel structure from the 1h chart on all the other charts. If you choose zero, it will show you the corresponding Keltner Channel structure for every time frame.
  • Length: Represent the Moving Average length, which will determine the lag time of the channel;
  • MA_Type: Zero for Simple Moving Average and 1 for Exponential Moving Average;
  • Shift: The offset of the indicator. How many periods you want to shift the Bands forward;
  • TimesATR: Determines the distance between the center line and the Keltner Channel bands.

Keltner Channel MT4 Indicator Trading Rules

When the price breaks outside of the channel it is a sign that the currency pair is either overbought or oversold. When it’s above the top band, it’s overbought and due for a correction when it’s below the bottom band it’s oversold and due to rebound. Additionally, the central line is the exponential moving average and it tends to act as support or resistance too, thus, the currency pair will bounce off its EMA but when it falls below it, it’s normally going to keep falling until it hits the bottom Keltner Channel band and if it penetrate through the EMA to the upside it will typically keep going until it hits the top Keltner Channel band.

Keltner Channel MT4 Indicator - Sell Signal ExampleKeltner Channel MT4 Indicator – Sell Signal Example

In order to make the best of use of the Keltner Channel MT4 indicator, we’re going to use it as a counter trend indicator, which means that we’re going to fade the previous trend. The strategy is quite simple as we’re going to sell once the market is in an overbought condition and retest the upper band of the Keltner Channel and buy once the market is in an oversold condition and retest the downward band of the Keltner Channel. The Keltner Channel strategy rules:

  • Currency Pair: Any
  • Buy/Sell: After it breaks the downward band waits for the next candle to close inside the channel again and vice versa for sell
  • Take Profit: Split the taking profits in two orders. The first half TP should be at the center line, after which we move SL at BE, and try to take the second half after it touches the opposite band.
  • Stop Loss: 10 pips above/below the breakout candle.

Keltner Channel MT4 Indicator - Buy Signal ExampleKeltner Channel MT4 Indicator – Buy Signal Example

Time Frames
Technically speaking, you can use this indicator for all time frames. However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly. We recommend that you use higher time frames like the 4H for better consistency.

Keltner Channel Strategy Video

Keltner Channel Strategy Video

Keltner Channel MT4 Indicator Download

We have provided this powerful trend trading indicator to you at no cost. We humbly request for your help to spread the word by sharing on one of the social platforms below. To unlock the download link, you just need to share this page to help us achieve our goal of helping more traders out there.

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Leave us a comment below to let us know your thoughts on this indicator. If you like this indicator, you might like see other indicators that we have carefully selected that will help you in your trading journey.

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Visit our Free MT4 Indicator Download page.

We hope you have enjoyed this post as much as we have creating it. Good luck and thank you for your readership.

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