Donchian Channel

Donchian Channel, developed by Richard Donchian, is a technical indicator consisting of N-period highest high, lowest low, and middle line. Donchian Channel is one of the simplest channel indicators, widely used in trend-following strategies, particularly in the Turtle Trading Rules.

Types

Donchian Channel is classic trend-following tool, widely used in Turtle Trading Rules. Buy when price breaks above 20-period channel upper band, sell when breaks below lower band. Use 10-period channel for exit signals: close long when price breaks below 10-period lower band, close short when breaks above upper band. Donchian Channel excels in strong trending markets but generates many false signals in ranging markets. Many traders combine Donchian Channel with ATR, adjusting position size during high volatility periods.