After students of technical analysis master some of the foundational indicators, they might want to tackle some of the lesser-known and discussed technical indicators.

Here we take a look at Keltner Channels and the Chaikin Oscillator which are not without a devout following. Keltner Channels Chester W.

Keltner introduced and developed the Keltner Channels in his book "How To Make Money in Commodities" Moving-average bands and channels are the same thing: Keltner Channels represent the average of the high, low and the closing price of an issue. On each side of the middle line are bands that are formed from the daily high minus the daily low over a period of 10 days.

Technicians believe the theory that the price of an issue is most likely to trade within the boundaries of bands or envelopes. The trader is to sell the issue when the closing price exceeds the upper band and to buy the issue when the closing price falls outside the lower band.

This theory is probably best explained in Perry Kaufman's book entitled " The New Commodity Trading System and Methods ".

5 Examples of Keltner Channels versus Bollinger Bands - Tradingsim

You can see in the above chart of Sun Microsystems, Inc. Arrows indicate a few examples of this happening. Learn more, in Using Bollinger Band "Bands" To Gauge Trends. Chaikin Oscillator Developed by Marc Chaikin, the Chaikin Oscillator is one of the more interesting of the lesser-knowns.

The Chaikin Oscillator monitors the flow of money in and out of the market. It calculates and plots the difference between the period exponential moving average and the three-period exponential moving average of the accumulation distribution.

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The accumulation distribution uses the relationship between the open and the close of the bar and the range of the bar to weigh and characterize the volume as accumulation buying or distribution selling.

The Chaikin Oscillator simply compares the money flow to the price action of an issue, which in turn allows the chartist to recognize tops and bottoms in short cycles. Marc Chaikin suggests that his indicator be implemented in conjunction with a day envelope based on the price of the issue.

Price envelopes are plotted at a set percentage above and below a moving average. They are used to indicate overbought and oversold levels. The chart above displaying JDS Uniphase from Jul to Feb shows arrows that walk you through interpreting the oscillator.

First off, the day price channels on top of the price action allow you to follow the overbought and oversold positions of this chart. It is very easy to see why many technicians would look closely at the Chaikin Oscillator when deciding whether or not to jump in or out of an issue. The first blue arrow up indicates the end of the oversold position of the issue.

The other two arrows are just as clear in indicating how timely this combination of Price Channels and the Chaikin Oscillator is. Remember it's your money - invest it wisely.

For more, read Moving Average Envelopes: Refining A Popular Trading Tool.

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Chart Created with Tradestation You can see in the above chart of Sun Microsystems, Inc.

Keltner Channel - Technical Analysis

Chart Created minimax trading system code Tradestation All fibonacci levels forex chart above displaying JDS Uniphase from Jul to Feb shows arrows that walk you through interpreting the oscillator.

How best to reconcile increasing or decreasing volume with price fluctuations? No one has a definitive answer, but Marc Chaikin has come as close as anyone. Enter the Chaikin Oscillator.

Traders can benefit from experimenting with envelopes, which help spot trends after they develop. Donchian channels, Keltner channels and STARC bands are not as well known as Bollinger keltner channels or bollinger bands, but they offer comparable opportunities. Learn how this indicator uses both price and volume to record a more complete picture of price action.

Find out how this indicator may help improve the average investor's entry and exit points. Technical analysis is basically an attempt to disprove the credo that "Past performance is not indicative of future results. Find out how to build these charts showing buy, sell, stop-loss and take-profit points, and even estimate length of trade.

Create basic trading strategies using the Chaikin Oscillator to identify possible market turns in direction and profitable The similarities between Chaikin money flow and the money flow index end with the idea that they are both commonly used by Read about some of the most common trading strategies and signals you can use with moving average envelopes on an asset's Learn how to create a trading strategy by combining two different technical indicators, Bollinger Bands and the stochastic Learn more about oscillator indicators, technical momentum measures that are used by traders to predict potential market Learn about the most popular volume oscillator indicators used in technical analysis, and see how they are calculated and An expense ratio is determined through an annual A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies.

Simple Keltner Channel Trading Strategy

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