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Channels are popular trading indicators and for a reason. A trader who knows how to utilize channels the right way can add a great tool to find more confluence factors for his/her price analysis. In this article I will talk about the Keltner Channel and the Bollinger Bands® – and which one you should use.

 

Bollinger Bands®

We talked about the Bollinger Bands® numerous times on this blog already. I, thus, want to briefly repeat what the Bollinger Bands® are doing.

  • The outer bands are based on the standard deviation of price fluctuations. Which means that the longer the candlesticks are, the wider the outer bands move away from each other.
  • Bollinger Bands® are most commonly used as a trend-following indicator. When the price stays close to the outer bands, it signals a strong trending market.
  • Bollinger Bands® can also be used to find reversal trading opportunities, especially when the price fails to hit the outer bands after a trending period and then turns to the opposite side of ...


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