Secrets of Keltner Channels and TSI How They Work in Combo Sept 12, 2020 Disclaimer

Secrets of Keltner Channels and TSI How they Work in Combo Sept 12, 2020 Disclaimer

• U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this training. The past performance of any trading system or methodology is not necessarily indicative of future results.

• CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

• All Materials presented are for training purposes only. Traders should paper trade any new method prior to risk of personal capital. Past Performance is not an indication or promise for future performance. Copyright ATTS 2007-2020 Every Chart Should have Adequate Information to Result in One of Three Actions

• Buy

• Sell

• Stand Aside

Today’s Training will provide a simple and clear approach to understand when each of these actions are the correct answer

• Shows Extreme Price Levels • Shows Strength of Trends • Provide Clues on when to enter, when to exit trades & when to stand aside • Great for Establishing Trade Value Zones (Action Zones for Conditional Orders) • Often Sets up Reversion Trade Opportunities

• Encourages Patience and Precision

Copyright ATTS 2007-2020 All Active Trend Trading Indicators & Chart Settings Provide Clues For Taking Action ❖ Primary Decision Clue ❖ Price Action—This is King!

❖ Supporting Decision Clue generators include: ❖ TSI Early Momentum Change ❖ True Strength Index (8,8,3 setting on TOS Charts) ❖ Keltner Channels (20 EMA, 2 & 3 ATR settings on TOS Charts) ❖ Moving Averages—8 ema, 20 ema, 50 ema, 100 sma & 200 sma (On weekly chart the only the 8 ema (approx. the 50 day), 20 and 40 sma ❖ Trend Lines & Price Level Support and Resistance Zones ❖ Pattern Breakouts & Breakdowns ❖ Candlestick Reversal Patterns

• Refined by Linda Raschke in the 1980’s

• A Volatility-based envelope set above and below an exponential moving average (some use SMA) which captures approximately 80-90% of price movement at 2 ATR Setting and 95%+ for 3 ATR setting

• A Trend Following indicator used to identify reversals with channel breakouts and channel direction

• Use in combination with TSI signals and other reversal clues to place conditional trade orders at solid levels of support or resistance

• Provide profit targets and stop loss levels for trade planning

• Works on all timeframes (intraday, daily, weekly, monthly) Copyright ATTS 2007-2020 Keltner Channels vs. Bollinger Bands

• Keltner Channels are smoother than Bollinger Bands because the width of the B Bands are based on standard deviations while K Channels are based on Average True Range (ATR).

• Many believe the K Channels are more sensitive because they use the exponential moving average, however some traders do use a simple moving average with the K Channels

• The smooth appearance makes K Channels well suited for trend following, swing trades and trend identification Copyright ATTS 2007-2020 Keltner Channels vs. Bollinger Bands

There is an excellent tutorial at: http://stockcharts.com/school/doku.php?id=chart_school:technic al_indicators:keltner_channels

This tutorial provides the basics on how to use K Channels for trade timing. However remember K Channels are still a supporting indicator. As always, Price is King!

Uptrend

Downtrend

Sideways Trend

• The 3 ATR Keltner Channel captures 95%+ of all Price Action

• Price Move Outside Interpretations • Strong Trend Move • Price Action outside 3 ATR cannot be maintained • Pullback inside 2 ATR can be profit taking or exit trigger

• Price Move Outside on Longer Term Chart reflects stronger long-term Move

Early Clues

Up Trend Something Changed Begins

Early Clues

“Observe things how they are; See things how they can be!” Market timing

TSI – It’s Amazing 1. What it Measures 2. How we can benefit from it 3. Time Frames • Swing : Intraday – Daily • Trends : Daily – Weekly • Long Term : Weekly – Monthly • In Sync

4. Quality of Signal

5. It’s Worth Waiting For!

It Measures Internal Momentum Changes

• TSI provide insight into internal momentum changes

• Developed by William Blau and introduced in Stocks & Commodities Magazine, the True Strength Index (TSI) is a momentum oscillator based on a double smoothing of price changes. By smoothing price changes, TSI captures the ebbs and flows of price action with a steadier line that filters out the noise. As with most momentum oscillators, chartists can derive signals from overbought/oversold readings, centerline crossovers, bullish/bearish divergences and signal line crossovers.

• Benefits: It helps traders determine overbought and oversold conditions of a security by incorporating the short-term purchasing momentum of the market with the lagging benefits of moving averages.

• http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:true_strength_index

2. After a pullback or correction wait for the turn in TSI ▪ When TSI Ticks-Up there will be other clues to provide clue certainty

3. Tends to work better from downside to upside

4. At the top, TSI Tick-Down and divergent tell us price action may be slowing

5. Positive & Negative Divergence increase probability for a change in Trend

6. Entry Set ups a. Tick Up b. Enter near to the close or at the open the following trade period 7. Use ATTS Stop Loss Rules

Copyright ATTS 2007-2020 Quality of Signal 1. What are the Different Time Frames saying? ❑ Are the Time Frames in Sync? ❑ Where is the bounce taking place (Oversold, Overbought, zero line?)

2. Swing Trades Use: Intraday and Daily (To a defined Profit Target or a few days or a couple of weeks)

3. Trend Trades Use: Daily & Weekly (Days, Weeks, Months)

4. Longer Term Trend: Weekly, Monthly (Weeks, Months or Longer)

5. Where are we in the cycle? Go from Long Term to Short Term Charts

84% 14 Days Up Trend Begins

What Now?

Early Clues

285% 195 Days

94% 212 Days

• When Used together, the value of price action clues are increased

• Great for planning ▪ Value Zones = Action Zones – For Conditional Orders

▪ Entries & Exits

▪ Short & Long-Term Trading Strategies