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Monday, August 17, 2009

Keltner Channel and Bollinger Band

When I learn about Average True Range and Standard Deviation indicator, I find it interesting when put Keltner Channel and Bollinger Band together on a chart. As we know, that the Keltner Channel is made from a combination of Moving Average and Average True Range. And Bollinger Band is combination of Moving Average and Standard Deviation.
What's interesting my attention when Bollinger Band (20.2) is located inside the Keltner Channel. (20.1). This is a technical condition which is very appropriate to describe the market conditions are in the sideway. Moving Average is located right in the middle chart. Support and resistance are on the right Bollinger Band. Unfortunately, often in a situation like this, the price Range doesn’t allow us to make profitable trades. Especially with the wide spread condition plus the possibility of getting slippage when taking and liquidating a position.
However, the longer market in the situation likes this, and then will be going to the big new trend. Possibility of profit that we get, can be lost quickly when the breakout occurred.
Bollinger Band is inside the Keltner Channel





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