Keltner Channels plot an exponential moving average with an upper and lower band placed a multiple of Average True Range (ATR) away. They look like Bollinger Bands but differ in one key way: the band width is based on ATR (true range) rather than standard deviation.

The ATR difference

Because Keltner Channels use ATR, they tend to be smoother and less reactive than Bollinger Bands, which use standard deviation and can widen sharply on a single volatile bar. This makes Keltner Channels better at defining the prevailing trend channel and filtering out noise, while Bollinger Bands react faster to sudden volatility spikes.

Reading them

Price riding the upper channel signals a strong uptrend; hugging the lower channel, a strong downtrend. A move outside the channel flags an unusually strong thrust. As with all envelopes, a band touch is not an automatic reversal signal — in a trend, price can walk the band, and fading every touch gets you run over.

Bollinger Bands twitch with every volatile bar. Keltner Channels breathe more slowly — better for reading the trend.

The Bollinger combo

A popular technique pairs the two: when the faster Bollinger Bands contract inside the smoother Keltner Channels, it flags a volatility "squeeze" — a compression that often precedes an expansion. That combination is a cleaner regime read than either alone. Like every indicator, Keltner Channels are one input — a trend-and-volatility lens, not a standalone system.