Keltner Bands Oil Technical Analysis and Keltner Bands Trading Signals

Developed by Chester Keltner. Described in his book "How to Make Money in Commodities"

Keltner Bands are based on ATR indicator, the bands use ATR values to draw the bands lines.

These Bands form Channels which help to identify the Oil Trading market trends using this simple volatility channel.

Keltner Bands

Construction

Keltner Channels are similar to Bollinger Bands except for the fact that Bollinger Bands use standard deviations method to determine market volatility and to draw the bands.

For the keltner bands instead of using the standard deviations the average true range (ATR) measure of volatility is used.

This technical indicator is an n number of periods exponential moving average of the closing oil price. These bands are created by

Adding (for the upper line) and

Subtracting (for the lower line)

An (n-period simple moving average of an n-period ATR) * an ATR multiplier.

Crude Oil Technical Analysis & How to Generate Trading Signals

This technical technical indicator can be traded in much the same way as a Bollinger Bands

Continuation Trading Signals

When crude oil price moves outside the bands then a continuation of the current oil trend is implied. A buy oil signal is when the channels are moving upwards and sell oil signal is when the channels are moving downwards

Continuation Buy Sell Trading Signals

Reversal Oil Signals - Double Tops and Double Bottoms

Tops and Bottoms made outside the bands followed by tops and bottoms made inside the Keltner channels indicate signal for reversals in the crude oil trend.

Reversal Trading Signals

Ranging Oil Trading Markets

In ranging markets a move which originates from one Keltner channel tends to go all the way to the other channel.