The Keltner Channel Forex Strategy is a volatility-based trade indicator. With the Keltner Channel Forex Strategy Forex traders can determine from which point the currency pair moves too far away from the moving average.
Just like the Bollinger Band indicator, the Keltner Channel also uses two bounding bands, which are made up of two moving averages over a ten-day period and are on either side of an exponential moving average. With the channels, traders can now determine whether a currency is oversold or overbought by comparing the price relationship to each side of the channel.
In theory, a trader can detect large price fluctuations by plotting the bands at a certain distance from the average price. As the market moves through the bounding bands, the likelihood that price action will continue in that direction is very high.