Donchian Channels

Dictionary Says

Definition of 'Donchian Channels'


A moving average indicator developed by Richard Donchian. It plots the highest high and lowest low over the last period time intervals.

Investopedia Says

Investopedia explains 'Donchian Channels'


The Donchian Channel is a simple trend-following breakout system. The signals derived from this system are based on the following basic rules:

1. When price closes above the Donchian Channel, buy long and cover short positions.
2. When price closes below the Donchian Channel, sell short and liquidate long positions.

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