What is Keltner Channel?

What it means

The construction is close to Bollinger Bands with one substantive difference: the width comes from ATR rather than standard deviation. ATR incorporates gaps, so a Keltner Channel reacts to overnight moves that a standard-deviation band based on closes will miss.

Why it matters

The classic combined use is the squeeze — when Bollinger Bands contract inside the Keltner Channel, volatility is unusually compressed and an expansion is often argued to follow. It is a genuine observation about volatility clustering, though the direction of the eventual expansion is not predicted by it.

What this changes in practice

We tested this family as SQUEEZE-FADE and TIGHT-BOX-FADE. Both fired zero times in live trading because the conditions they require — genuinely dead tape on gold — effectively never arrive during our session window. That is a useful negative result about XAUUSD specifically rather than about the indicator.