What is the Donchian Channel?
The Donchian Channel is a trend-following indicator formed by the highest high and lowest low over a set period. It helps traders identify breakout opportunities and trend direction.
- Upper Band: Highest high of the look‑back period
- Lower Band: Lowest low of the look‑back period
- Middle Band: Average of the two (optional)
How the Strategy Works
Buy when the price breaks above the upper band. Sell (or short) when the price falls below the lower band. Optional stop‑loss can be placed at the opposite band.