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Using the Keltner Channel indicator in trending markets

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binary options trading strategy
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Keltner Channel binary strategy

Keltner Channel binary options indicator visually displayed on the graph in the form of strips. This indicator can be attributed to the trend type.

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Keltner’s construction is based on the maximum and minimum price levels, which are defined for a certain period of time. Auxiliary tool can be used to find good signals for binary options buying on the breakdown of current resistance and support levels.

When we buy Call or Put option with this strategy?

If the price breaks above the upper border on the chart, that is the current level of resistance, it is possible to buy Call option.
If the price, on the contrary, breaks the lower bound, that is, the current level of support, you can buy a Put option.

In order to understand how this indicator is constructed, it is necessary to know that it's based on maximum and minimum prices for a certain time period. Keltner Channel binary option indicator shows not only the direction of the trend but rather follows it and the current market volatility.

Keltner_Channel_strategy

As noted above, this chart is visually displayed in form of lines which form an envelope. In some sense, the auxiliary tool resembles Bollinger bands indicator. Keltner Channel lower band is built on the low prices, the upper band – on price highs.

Simple constructions and calculations

Prices in the Keltner Channel binary options indicator are in the range between its extreme bands. However, the significant difference between this binary option indicator and other similar auxiliary lane tools is exactly that it is simple in terms of construction and calculations.

In its calculation only extreme values of the minimum and maximum closing prices are used.

You should use 20 period to work with

The inventor of this binary options indicator Chester Keltner has recommended the use of 20 period to work with. His recommendations have a certain soil. For example, if the value of the period is one day, the indicator will show the four-week and twenty-day breakdowns.

A technical analysis has a sufficiently large arsenal of trend and breakdown techniques that as a basis have exactly twenty-day breakdowns.

If you use the period recommended by Chester Keltner, the top line will indicate the maximum price for the twenty periods. As for the bottom line, it will show the minimum price level for twenty periods.

Call or Put Signals with Keltner Channel

Good signal to buy Call binary option occurs when the price breaks the upper line of Keltner Channel binary option indicator upwards. To purchase Put binary option, you must wait until the price breaks the bottom line of the indicator.

It can be used to search for turning points in the market. For example, if the price fails to break through the line of support or resistance, it is likely that the price will discourage the level and go to the opposite end of the range. In this case, you can buy an option in the opposite direction of the previous trend.

It should be noted that this binary options indicator is best used with other indicators that will help eliminate false signals. It is also important to emphasize that the Keltner Channel works only in trending markets.