To The Moon

I have previously write about IMUX and we do make some gains from the article. So I would like to show you in this article how we can assess if IMUX is still a GOOD BUY with Keltner Channel Indicator.

First, let me share with you my understanding of the Keltner Channel Indicator.

Keltner Channel Indicator has gained popularity among technical analysts. It was developed by Chester Keltner in the 1960s, the Keltner Channel is a versatile indicator that helps identify potential trading opportunities, determine price trends, and manage risk.

Let us explore the concept behind the Keltner Channel and its practical application in $Immunic, Inc.(IMUX)$

What is the Keltner Channel?

The Keltner Channel is a volatility-based technical indicator that consists of three components: a central moving average line, an upper channel line, and a lower channel line.

It is designed to track the average price range of an asset and provide traders with a visual representation of its volatility.

The indicator takes into account both the price and the average true range (ATR), a measure of volatility, to establish the upper and lower boundaries of the channel.

Calculation and Interpretation

The Keltner Channel is calculated using the following steps. (I have used this to develop a simple python program which will do a chart plot and strategy (this shall be shared later).

1.     Calculate the Exponential Moving Average (EMA): Typically, a 20-period EMA is used, but traders can adjust the period based on their trading style and timeframe.

2.     Calculate the Average True Range (ATR): The ATR measures the volatility of the asset and is often computed using a 10-period ATR.

3.     Set the Upper Channel Line: Add a multiple of the ATR to the EMA. The most commonly used multiple is 2.

4.     Set the Lower Channel Line: Subtract a multiple of the ATR from the EMA, using the same multiple as in step 3.

The resulting plot displays the central moving average line, which represents the average price, along with the upper and lower channel lines that encompass the price range.

Interpreting the Keltner Channel involves analyzing the relationship between the price and the channel lines. (these 2 important points)

When the price is trading near the upper channel line, it suggests that the asset is overbought, indicating a potential reversal or a period of consolidation.

Conversely, when the price is near the lower channel line, it indicates oversold conditions, signaling a possible buying opportunity or a consolidation phase.

Practical Applications

1.     Identifying Breakouts: The Keltner Channel can be an effective tool for identifying breakouts from consolidation phases. When the price breaks above the upper channel line, it may indicate a bullish breakout, suggesting a potential uptrend. Conversely, a break below the lower channel line could signify a bearish breakout, indicating a potential downtrend.

2.     Trend Confirmation: Traders often use the Keltner Channel in conjunction with other trend-following indicators to confirm the direction of the prevailing trend. If the price is consistently trading above the central moving average line and the upper channel line, it suggests a strong uptrend. Conversely, if the price remains below the central moving average line and the lower channel line, it implies a bearish trend.

3.     Volatility Assessment: The Keltner Channel's ability to measure volatility makes it useful for assessing market conditions. When the channel narrows, it indicates low volatility and a period of consolidation. Conversely, widening of the channel suggests increasing volatility, which may present trading opportunities for traders who thrive on volatility.

Now that we have understand what is Keltner Channel, how it is calculated. I shall show you the chart for IMUX and we shall assess it based on its practical application.

IMUX Keltner Channel Chart

IMUX based on the KC chart, it is currently above the Upper 20, which could indicate an overbought situation.

This also signal a potential reversal. Another way I look at it is IMUX could be consolidating.

I would think IMUX could still be an interesting BUY.

Summary

The Keltner Channel is a valuable tool for technical analysis that provides traders with insights into price trends, volatility, and potential trading opportunities.

By combining elements of moving averages and average true range, this indicator offers a visual representation of an asset's volatility, enabling traders to make informed decisions about market entry, exit points, and risk management.

However, like any technical indicator, it is essential to use the Keltner Channel in conjunction with other tools and indicators to validate trading signals and minimize false signals.

By just looking at one stock with KC would not be a good way to plan our trading plan.

I hope to share more trading strategy with KC inside from the A.I. model.

Appreciate if you could share your thoughts in the comment section whether you use KC in your trading plan or do you have any stock you would like me to cover using Keltner Channel (KC).

@TigerStars @Daily_Discussion @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.