Volatility and trend strength

Donchian Channel

Donchian Channel draws the highest high and lowest low of the last N candles. A 250-day channel on daily candles is the 52-week high and low.

How to read it

  • A close above the upper line is a breakout to a new N-period high.
  • The lower line can be used as a trailing exit.
  • The width shows how volatile the stock has been.

Settings

Default 20. Use 250 on daily candles for 52-week levels.

Example rule to test

Scan idea: stocks closing at a new 52-week high.

Common mistake

Chasing breakouts without checking volume.

Try it free on iTradeChart

For learning only. Backtests use past data and do not guarantee future results. Not investment advice.