Donchian Channel
Donchian
The highest high and lowest low of the last N bars; a close outside the channel signals a breakout.
How to read it
The Donchian channel plots the highest high and the lowest low over a lookback window, forming a band around price. A flat upper line means price hasn't made a new high for a while; a rising channel shows an advancing market.
Trading signals
It's a breakout tool: price closing above the upper band is a long breakout (a new N-bar high), below the lower band a short. The opposite band then serves as a natural trailing stop. In a range, breakouts can be false — confirm with a trend filter.
Parameters
Donchian Channel Period sets the lookback for the high/low. A longer period gives a wider, slower channel and rarer, more significant breakouts.
- Donchian Channel Period
- Bars for the highest-high / lowest-low channel.