Volatility & Bandsdraws on the price

An EMA with bands scaled by true range instead of deviation. Worth having because Bollinger exists — the two disagreeing is itself a signal.

On this chart: 20-period EMA, ±2 × ATR(10).

Keltner Channels wrap a 20-period EMA in bands two ATRs wide. The difference from Bollinger is the volatility measure: Bollinger uses the standard deviation of closes; Keltner uses average true range, which includes gaps and intrabar movement. ATR also responds to a volatility change more gradually than deviation does.

The same stretched-versus-average reading as Bollinger, on a steadier band. The famous joint read: when the Bollinger bands contract inside the Keltner channel, close-to-close movement has gone quiet even relative to bar ranges — the compression that the TTM Squeeze pane flags explicitly.

Because option premium is priced off expected movement, an ATR-scaled band speaks premium's language: the channel edges are "two typical daily ranges from the average." A strike outside the channel is beyond that distance — a volatility-native way to describe cushion.

Like everything in this guide, these are descriptions of conditions and reference levels — context for your own decisions, not instructions to trade.