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Donchian Channels are three lines generated by moving average calculations that comprise an indicator formed by upper and lower bands around a mid-range or median band. The upper band marks the highest price of a security over N periods while the lower band marks the lowest price of a security over N periods. The area between the upper and lower bands represents the Donchian Channel. Career futures trader Richard Donchian developed the indicator in the mid-twentieth century to help him identify trends. He would later be nicknamed “The Father of Trend Following.”

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Donchian Channel settings

Alerts

  • When the upper and lower lines both turn upwards or downwards
  • When the price breaks the upper or lower line

Signals

Strong LongWhen the upper and lower band are both rising and the price is above the midline,
OR when a bullish bar’s high touches the upper band
Weak LongWhen the upper and lower band are both rising and the price is below the midline,
OR when upper and lower band are different and a bullish bar is above the midline
NoneWhen the other conditions aren’t valid
Weak ShortWhen the upper and lower band are both falling and the price is above the midline,
OR when upper and lower band are different and a bearish bar is below the midline
Strong ShortWhen the upper and lower band are both falling and the price is below the midline,
OR when a bearish bar’s low touches the lower band

Settings

PeriodThe number of bars to evaluate
Show upper/lower colorIf checked the upper and lower band lines will be colored based on their slope; if (the last) slope is upwards the line is green, if it’s downwards the line is red
Show CloudEnable this to color the space between the bands
Cloud ColorThe color of the cloud
Cloud OpacityThe opacity of the cloud as percentage where 0 is completely transparant and 100 is completely opaque
PlotsThe style of the Mean, Upper and Lower lines