Trading cryptocurrency market using keltner channel indicator

Trading cryptocurrency market using keltner channel indicator

By quintomudigo | Teacher forex school | 19 Feb 2020


Keltner channel is a trend following indicator.

Being a trend following indicator,Keltner channel indicator was created by Chester .W. Keltner with the main objective of helping traders to know whether the market is trending upwards or in a downward direction.Just like in other trend following indicators,keltner channel is based on support and resistance. Keltner channel is further considered to be similar to bollinger band and donchian channels on the fact that it is also used to identify the volatility of the market.

Just like in bollinger band, keltner channel also has 3 bands, the upper band, the middle band and the lower band.The upper band represent the highest high while the lower band represent the lowest low.

 

According to Chester Keltner,its value is derived using the average true range as follows;

upper keltner channel = n-period exponential moving average + average true range multipliers


lower keltner channel= n-period exponential moving average- average true range multipliers

middle keltner channel = n-period exponential moving average

 

Using bullish and bearish cryptocurrency market, keltner channel can further be explained as follows;

 

1. Keltner channel bullish cryptocurrency market

Therefore, since keltner channel has upper band and lower band, it therefore follows that when the prices accumulate above the upper band(keltner) that will be an indication that the market is trending upwards thus the cryptocurrency trader should be trading in an upward market direction since a support point will have started to be created. The cryptocurrency trader can purchase a given amount of cryptocurrency using a market buy order which will be processed immediately or a limit buy order which will be processed when the market reaches a limit buy order price. This is indicated as from below;

 

351665157-489c9301a3605de8b228ce5416bfcd48e69af62b546aaf652834ccf800eb6b0c.png

 

The above is the TRX market against USDT. Four points are being indicated. There is point A,B,C and D. Point A is the upper keltner channel while point B is the middle keltner channel. On the other hand, point C is the lower keltner channel while point D is the support point where the price has started to accumulate above the upper keltner channel thus signaling the cryptocurrency trader to purchase a given amount of TRX with their USDT balance. The trader can either place a market buy order which will be executed instantly or a limit buy order which will be processed when the market reaches a buy limit order price. When the order is being processed, the account of the trader will start increasing in value in terms of USDT if the price is accumulating above the upper keltner channel.

 

 

2. Keltner channel bearish cryptocurrency market

Therefore, since keltner channel has upper band and lower band, it therefore follows that when the prices accumulate below the lower band(keltner) that will be an indication that the market is trending downwards thus the cryptocurrency trader should be trading in a downward market direction since a resistance point will have started to be created. The cryptocurrency trader can sell a given amount of cryptocurrency which he had previously purchased and is currently holding using a market sell order which will be processed immediately or a limit sell order which will be processed when the market reaches a limit sell order price. This is indicated as from below;

351665157-a64653dbb912bc7e4cbe8f4daa90ff56ca0e7b3047b02a7ccd3e1066c96b260c.png

The above is the TRX market against USDT. Four points are being indicated. There is point A,B,C and D. Point A is the upper keltner channel while point B is the middle keltner channel. On the other hand, point C is the lower keltner channel while point D is the resitance point where the price has started to accumulate below the lower keltner channel thus signaling the cryptocurrency trader to sell a given amount of TRX which he had previously purchased and is currently holding. The trader can either place a market sell order which will be executed instantly or a limit sell order which will be processed when the market reaches a sell limit order price. When the order is being processed, the account of the trader will have increased in value in terms of USDT.

 

 

cryptocurrency market is a highly volatile market. As a cryptocurrency trader,whenever you place a buy order,always make sure to apply risk management so that whenever your buy order goes against you, your account do not depreciate so much in value.

 

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quintomudigo
quintomudigo

Trader, Blockchain Technologist and Contentpreneur. Also founder and CEO @ Teacher Forex School.


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