Created by two bands plotted around a 20-period exponential moving average, the channels take into account volatility in gauging price action. As a result, the indicator works well in trending markets while producing lackluster results when applied to a more range bound environment. In interpreting signals, buy signals are produced when the price breaks and closes above the top band. Conversely sell signals are produced when the price action breaks and closes below the lower band. Originally created by Chester Keltner, the application has been modified by Linda Raschke while additionally incorporating average true range calculated over 10 periods.