the hAndbook of technIcAl AnAlysIsFigure 12.20 Keltner Bands versus STARC Bands on the Daily Chart of Silver.
Source: MetaTrader 4
(H+L+C)/3 ± 10‐period SMA of ATR. It is somewhat narrower than the STARC
bands. See Figure 12.20. Based on the popular parameter settings, we see that the
Keltner bands tend to give more breakout trades when compared to the STARC
bands and are therefore more suited for breakout trading. It should be noted that
many practitioners also use a 10‐ or 20‐period exponential moving average in-
stead of the 10‐period SMA of typical price.
Starc Bands comprise a six‐day SMA of typical price, that is, (H+L+C)/3. The
bands are located at some multiple of a 15‐day ATR, usually two or three times
the 15‐day ATR. The advantage of using STARC bands is that its parameters are
not usually adjusted to fit the price behavior. It is used as it is and that makes
this a very objective indicator. It is normally used to initiate standard reversal
entries. Figure 12.21 shows the buy and sell reversal entries in Silver. We initiate
entries that have been filtered by a cycle‐tuned stochastic oscillator. Hence we sell
if it is within a period of overbought and buy if it is within a period of oversold.
Nevertheless, it should be noted that no oscillator works perfectly all of the time.
Notice that Point X on the chart represents a potentially strong buy level due to a
confluence of bullish indications comprising:
■ (^) A prior support level (bullish)
■ (^) A STARC lower band support barrier (bullish)
■ (^) Oversold indication on the cycle‐tuned stochastic oscillator (bullish)
Linear regression bands also contain price action. The central value is a
regression line flanked by upper and lower bands that are exactly one (or two)
standard deviations away from the regression line. Again, if the bands are not
too steep, it may lend itself to breakout trades. But if it is very steep, reversal
entries only should be taken. Note that linear regression bands only contain