Keltner Lower (20)

The lower Keltner band is the mid line minus a multiple of ATR. Price near or below it can signal strong downside moves.

The calculation:

Lower Keltner = Keltner Mid - (Multiplier × ATR)
Typically: Lower Keltner = 20-EMA - (2 × 10-period ATR)

What the lower band represents:

• Volatility-based boundary: Based on Average True Range
• Dynamic support: Adjusts with price level and volatility
• Smoother edges: Less reactive than Bollinger bands

How to interpret:

• Price at lower band: Strong downward momentum
• Breakdown below: Exceptional weakness; potential trend acceleration
• Walking the band: Sustained downtrends ride along lower band
• Reversal from band: May indicate short-term bounce opportunity

Trading applications:

• Trend confirmation: Price consistently near lower band confirms downtrend
• Short entries: Rejection from mid line in downtrend may offer short entry
• Cover targets: Lower band can serve as cover target for shorts
• Mean reversion: Extended move below band may set up bounce trade

Like the upper band, the lower Keltner provides a volatility-adjusted view of price extremes. Its smoother construction helps identify genuine trend moves versus noise.