An ATR-based envelope. Where Bollinger Bands measure the spread of consensus through standard deviation, Keltner measures the depth of the market's breathing through range.
Keltner Channels began with Chester Keltner, a grain-market trader, in the 1960s, and were later refined — most notably by Linda Bradford Raschke — into the ATR-based form that traders use today. A central exponential moving average is wrapped by a band whose width is a multiple of the Average True Range.
The shape resembles Bollinger Bands, but the underlying measurement is different. Bollinger uses the standard deviation of price — a statistical spread of closes. Keltner uses the average of true range — the depth of each bar's swing. One captures the breadth of consensus; the other captures the depth of the market's breathing.
In practice, the two are complements rather than rivals. John Carter's well-known "TTM Squeeze" — the condition in which Bollinger Bands sit entirely inside Keltner Channels — has become a widely used signal for compressed volatility precisely because it puts these two perspectives in dialogue.
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