Description
As the name suggests, the Keltner Channel belongs to the channel type of indicator.

Calculation
Here the channel bands are generated around an EMA. This is done by applying an Average True Range to the closing price, and multiplying it with a factor, the so-called bandwidth.

Formula where EMA is the Exponential Moving Average, C is the closing price, F is a factor and ATR is the Average True Range.

Parameters
The parameters of the EMA, which can assume values between 1 and 500, and the bandwidth, which can assume any value. The standard setting is 7 for the EMA and 1 for the bandwidth.

Interpretation
As a channel indicator, the Keltner Channel does not essentially differ from its relations, and so its interpretation is the same. In particular, it follows the interpretation of the Bollinger Bands.