Trading KST momentum indicator with Keltner Breakout on Nifty

keltner channel kst kst momentum nifty Feb 26, 2024

Nifty touched lifetime high levels and showing some loss of momentum from there.

Using momentum indicators along with breakout techniques that can help in capturing the entire up move is important.

Nifty 15 minutes chart: 

In above chart of Nifty we can see two important indicators that are focused on prices and momentum.

Keltner channel – This indicator is different than that of Bollinger Bands®. Bollinger Bands uses standard deviation to the mean whereas Keltner channel is derived using Average True Range (ATR). Both of the indicators have different way of application.

In Keltner channel we can see that break above upper channel on 22nd February which was the 1st break above the upper band of Keltner. Post that prices are moving within the bands indicating it is only a retracement of the up move unless we see breakout below the lower end of the Keltner channel.

KST momentum – Breakout on Keltner channel was also accompanied by KST momentum indicator. KST momentum indicator broke above 0 line and also the signal line thereby giving strong confirmation that momentum was picking on upside.

In entire up move prices have not moved below the lower Keltner channel and KST if now again moves back above the 0 line it will indicate a positive reversal. This can be a pause before the resumption of trend but a classic signal can be expected when both these techniques again get synchronized.

In a nutshell, Keltner channel helps to understand if the size of candle is increasing which is suggesting a significant move and KST further provides confirmation of momentum. Price action above 22150 which is mid of the channel will result into another synchronous signal from these indicators.

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