KELTNER CHANNEL
The Keltner Channel can be used on charts of any time  frame,  and  is  veryuseful as a component of a Cycle Trading  Pattern  when  calculated  in  thetime frame used to determine trend.
Chart 18 - In the daily Tbond  chart  below,  the  trading  cycle  tops  andbottoms are indicated by the arrows; the weekly cycle tops  and  bottoms  bythe “W”s. A 5-week moving average is plotted on  the  daily  chart  and  theKeltner Channel is plotted 1.1 standard  deviations  above  and  below  thismoving average. Both the moving average and the standard  deviation  can  bemodified.
When buying bottoms in the direction of trend the biggest moves  often  havea “rubberband” effect following an  overextension  to  the  downside.  Aftermeeting resistanceat the upper channel line, a drop below  the  moving  average  would  be  anoverextension if prices remain  above  the  lower  channel  line  basis  theclose. In our chart example, a drop below the moving average followed by  anRSI3M3 mechanical buy signal above the lower channel line  occurred  at  sixtrading cycle bottoms. All were followed by  sizable  upmoves.  Notice  thatthe price lows and trading cycle bottoms occurring above the moving  averageline had much smaller upmoves in price and often in time.
At times, an uptrend can be inferred by prices  meeting  resistance  at  theupper channel line, then dropping into a  trading  cycle  bottom  below  themoving average, but above the lower channel line.