Donchian Channel

The Donchian channel ( in German: Donchian channel ), named after its inventor, Richard Davoud Donchian, is an indicator that is used in technical analysis.

It is formed by the high and the low of the last n days, and represents the variation of the course in the last n days dar.

The Donchian Channel is a useful indicator to the volatility of market prices to recognize. If the price is stable, the channel is relatively narrow, with large fluctuations it is wider. It can be used strategically for trend-following strategies by which an outbreak of a new high is a buy signal and a breakout to a new low is a sell signal. This strategy proved successful especially in clearly defined movements, while in cases where the market condition is not unique, the strategy is unprofitable.