GlossaryIntermediate
Donchian Channels
Bands plotted at the highest high and lowest low over a lookback period, commonly used to identify breakouts from a recent trading range.
Donchian Channels, developed by Richard Donchian, plot the highest high and the lowest low reached over a set lookback period as an upper and lower band, with a price breaking above or below either band meaning it has reached a new extreme for that window.
Donchian Channels are historically associated with breakout-based trend-following systems, most notably the "Turtle Traders" program, which used a version of this concept to generate entry and exit signals. See Kaavon's dedicated Donchian Channels article for the full calculation.
Examples
- Price closing above the upper Donchian Channel means it has reached its highest level of the entire lookback period, a classic breakout signal.
- Donchian Channels are historically associated with the "Turtle Traders," a well-known breakout-based trend-following system.