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Donchian Channel (Upper) Indicator

The Donchian Channel is a trend following breakout system.  It is recommended to use the Donchian Channel in trending markets, and as a result can perform poorly in sideways markets.  The signals derived from the Price Channel are based on the following basic rules:

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

The Donchian Channel indicator is not meant to catch tops or bottoms, only trends.  Trend traders may want to extend the standard 4 week period to 8 weeks in order to wait for significant trend signals, while others may shorten the period to a more sensitive 1 or 2 weeks for liquidation purposes.

See Also

Donchian Channel (Upper) Developer Help

Donchian Channel (Lower)