This is the Moving Average Channel and it is in many scenarios better than the Keltner Channels. This Moving Average is so simple that even your dog can set it up and make money with it. This is not a standalone indicator like the Keltner Channels, instead, these are 2 normal simple moving averages that don’t intersect with each other, creating a channel.

To create a moving average channel, first, you plot a simple moving average. On many charting platforms, it will come with a length of 9 and will calculate the average using the closing prices of the candles. Change the length of this moving average to 20. Then, plot another simple moving average, and set its length to 20 as well. Now you should have two moving averages on top of each other. To separate them and to create a moving average channel, make one moving average calculate its values using the high of the candles. And make the other moving average calculate its values using the low of the candles. On TradingView, you can do that by changing the source of the moving average.

Now you should have two moving averages creating a channel. These moving averages will adjust with the price movement. and will move closer to each other when the price movement is slow. and will move further away from each other when the price is trending or volatile. Remember that these are still simple moving averages. So if you want the moving average to react faster to the price movement, use a smaller period moving average, and if you want the moving average to react slower, use a longer period moving average. But increasing the length of the moving average won’t increase the size of the channel.

In the Moving Average Channel Strategy, the 20-period moving averages are used most of the time. And when the price is between these two moving averages, all entry signals are ignored.

When the price opens and closes above the moving average channel, it’s a buy signal. You can always use a longer period moving average like the 200 E MA to find the long-term trend direction. If the price is in an uptrend, set the stoploss below the pullback. Also, ignore all short signals above the 200 period moving average.
In a downtrend, when the price opens and closes below the moving average channel, it’s a sell signal. Set the stoploss above the pullback of the trend. In a downtrend, since the price has a higher probability of moving in the downward direction, ignore all long signals below the 200 period moving average.

Of course with the same method, you can create a channel with a 200 moving average, to filter some of the false signals in the slow-moving markets. But the moving average channel is mostly used with a short length like 20, to capture strong short-term moves on the smaller timeframes.

To find if it works or not in the long run, we will take 100 Trades with it in the next video and find its win rate.

That’s all.