The Keltner Channel is a technical analysis tool used to identify potential price trends and volatility in financial markets. Developed by Chester Keltner in the 1960s and later refined by Linda Bradford Raschke, it consists of three lines: a central moving average (typically an Exponential Moving Average or EMA) and two outer bands set at a distance based on the Average True Range (ATR).

The upper and lower bands expand and contract with market volatility, widening during high volatility and narrowing during low volatility. Traders use the Keltner Channel to spot overbought or oversold conditions: prices touching the upper band may suggest an overbought market, while touching the lower band may indicate oversold conditions. Additionally, a sustained move outside the bands can signal a strong trend.

Unlike Bollinger Bands (which use standard deviation), the Keltner Channel relies on ATR, making it smoother and less prone to false breakouts. It is commonly used in conjunction with other indicators like the Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD) for confirmation.

Overall, the Keltner Channel helps traders gauge trend strength, volatility, and potential reversal points in stocks, forex, and other trading instruments.