A little-known waterway named after an explorer with the last name of Keltner? An early cable outlet dedicated to programming aimed at a Celtic audience?
Nope. It's an indicator used in technical analysis.
Technical analysis looks at an asset's price movement and uses that information to project how the asset will perform in the future. So...a technical trader would look at a stock chart and look for patterns in the stock's movements. Then they would use those patterns to predict what's likely to happen next.
A Keltner Channel (named after Chester W. Keltner, who introduced the concept in 1960) involves tracing three lines.
First, you draw a moving average (well, a computer does the drawing for you). A moving average calculates the average of recent prices over a set period of time. It "moves" because every day a stock trades, it creates a new price point. That changes the average. The moving average line tracks this changing average.
In the case of Keltner Channels, the moving average is an exponential moving average...meaning that more recent data points get more weight in the equation. So movements that took place a little while ago don't have as much impact as things that happened in the more recent past.
The other two lines of the Keltner Channel appear above and below the moving average. They are equidistant from the moving average line. These two lines trace the moving average to form a channel, or band...like a stream the stock might move in.
Investors using Keltner Channels are looking for situations where the stock price moves either above or below the channel. These circumstances can represent shifts in the stock's trend. For instance, a stock that peeks above the top of the channel might have pushed too far to sustain its advance. It might start losing ground as the trend reverses.
These scenarios can also signal an acceleration of the trend. It's up to the technical analyst to use other information to determine what the move beyond the Keltner Channel means.
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Finance: What is Technical Analysis?12 Views
Finance a la shmoop what is technical analysis okay we have fundamental [Fundamental analyst sat at a desk]
analysts who look at what the company does for a living how hard its products
are to manufacture how much they sell for how big global demand is how [Fundemental analyst check list]
powerful their brand is what their profit margins are in their growth
prospects from there how their balance sheet looks you know stuff like that
technical analysts don't care at all about any of that stuff those are
fundamental elements of a company technical analyst view stocks only as [Technical analyst chucks the list away]
trading sardines and really couldn't care less how the companies they are [Sardines with company logos on]
trading actually make money or run their businesses technical analysts follow
stock charts with influence from all kinds of shapes made by recent [Examples of shapes on a blackboard]
historical prices on a graph made by these stocks like you have a triple top
here right like so there's a hard line is trying to break out of that line line [Top line is highlighted]
says nook smacking you back down they can't break out so it's triple top and a [Hand smacks the price back down]
lot of gravity there so no maybe I'm short that stock at the end of that
triple top all right then you have the dome yeah it just kind of goes up but it
doesn't really want to break up so it's kind of trading down and then what do I
do with the stock here I don't know I don't know then you have descending tops [End of the dome is highlighted]
where Oh tried to break out oh but now it's a lower low because they miss their
earnings ah now it's a lower low and again they missed so the stocks going [Trend line showing the price going down]
nowhere it's pretty depressing around here then you have a saucer notably
shaped like a smiley face yeah you can see the two eyeballs there so you want [Smiley emoji appears]
to be long that stock somewhere in the middle there because
then it goes up and does better and yeah life's good and color and dimension gets
added to the stock charts via other technical things like volumes of shares [Colorful 3d stock chart]
traded in a given week or day or month if you're having a mini deja vu well it
might be because you just saw our M night Shyamalan dingdong
directed video directly cleverly called what is a Chartist and while they're [Girl working behind a computer]
basically the same thing technical analyst and chart us you know
same foot so yeah fundamental analyst concerned with nuts and bolts of the
operations of a business technical analyst concerned with pretty little [Descriptions of each analyst shown next to them]
drawings of the nuts and bolts reflection on a graph and interpreting
what that all means a kind of like staring at you know animal problems in [Looking at dung through a magnifying glass]
the jungle mental health analyst well I had to get a lot of these guys in their
office sorry different kind of therapy [Both the analysts at a therapist]
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