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Keltner Bands are an excellent and powerful analytical trading tool to anticipate Support and Resistance levels in trending moves, and to also identify Support/Resistance levels of Congestion ranges.

A Keltner Band is based on a 45-bar moving average (day, week, month, intraday price bar, etc.), and a Standard Deviation move away from the 45-bar centerline, based on the average true range.

The Keltner Bands can be used for Support/Resistance levels, and can also be combined with Mechanical Buy/Sell as in Template 7.

The Standard Deviation used in this chart is 1.95, but following the downside breakout would be increased to 6 or 8. Prices reaching a widely watched Standard Deviation of 6 or 8 will often end a move.

Hands-On for ProfitTrader Users
To get a "feel" for the Keltner Bands, change the STD DEV in monthly, weekly, daily (and intraday, if you have it) charts from 1 to 8 to see how the Bands change.


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