Keltner Chanel Reversal

Professional traders love their Keltner Chanels because it provides great trading opportunities for both directional and swing trading. Here is an example for a way to trade a midday swing.

Keltner Chanel
An opportunity to trade a trend change with the Keltner Chanel Study

After a strong downtrend can be observed with prices heavily moving down and outside of the chanel, the candles return back into the chanel. Once inside the downward trend continues until it touches the bottom grid of the chanel. It gets rejected here and price keeps moving up. It is a beautiful way to trade a reversal as stop-losses as little as 10 points can be used with a risk reward ratio of more than 10 in this case.

Inside KeltnerChanel Reversal

A similar case can be made for a direction price reversal of lower intesity when prices are creeping into one direction and the first reversal attempts fails disregarding price action. A touch of the Keltner Chanels border can be used with a pin bar price action to suggest the chance of a kiss-and-buy signal as seen in the follwing Dax Chart.

kiss and buy signal
The German Dax made a huge bounce ahead of Monday’s open while pushing off of a Keltner Chanel low on the 3 min chart. A pattern that keeps repeating itself on many days.

The intensity and regularity of such events suggest this pattern is an opportunity with an immense potential for trading with a limited risk to the downside.

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