Bollinger Bands are a technical analysis tool used in financial markets to measure the volatility of a security’s price. The bands consist of three lines: a moving average (typically a 20-day simple moving average), an upper band, and a lower band. The upper and lower bands are calculated by adding and subtracting a multiple of the standard deviation of the price from the moving average.

The purpose of Bollinger Bands is to provide a visual representation of the price range of a security, and to signal when a security is potentially overbought or oversold. When the price is near the upper band, it may be considered overbought, while when it is near the lower band, it may be considered oversold. Traders can use Bollinger Bands to develop trading strategies, such as buying when the price reaches the lower band and selling when it reaches the upper band. However, it is important to note that Bollinger Bands are just one tool among many that traders can use, and they should be used in conjunction with other analysis techniques to make informed trading decisions.

Here is an example of Bollinger Bands applied to a chart. You can see an example of the price hitting the lower band, indicating a bullish condition of being oversold, and then moving sharply upward until it reaches the upper band, indicating a bearish condition of being overbought.

Keltner Channels are a technical analysis tool used in financial markets to measure the volatility of a security’s price, similar to Bollinger Bands. However, Keltner Channels use a different calculation method to create the upper and lower bands.

Keltner Channels consist of three lines: a centerline, an upper band, and a lower band. The centerline is typically a moving average, such as a 20-day exponential moving average. The upper and lower bands are calculated by adding and subtracting a multiple of the average true range (ATR) from the centerline. The ATR measures the average price range of a security over a certain period of time.

The purpose of Keltner Channels is to provide a visual representation of the price range of a security, and to signal potential trading opportunities when the price bounces off of, or breaks through, the upper or lower band. When the price breaks through the upper band or bounces against the lower band, it may be considered a potential buy signal, while when it breaks through the lower band or bounces against the upper band, it may be considered a potential sell signal.

Keltner Channels can be used in conjunction with other technical analysis tools to make informed trading decisions, but like any analysis tool, they should be used with caution and not relied on as the sole indicator for trading decisions.

Here are some examples of Keltner Channels on a chart. The first image shows a break through the upper band leading to a big upward move in price. The second image shows the price bouncing off the upper and lower bands as they act as support and resistance.