Donchian Canal
The Donchian channel (or English Donchian channel ) - named after its inventor Richard Davoud Donchian (1905-1993) - is an indicator that is used in chart analysis .
It is formed by the high and the low of the last n days, and represents the fluctuation range of the price in the last n days.
The Donchian Channel is a useful indicator for looking at the volatility of market prices. When the price is stable, the channel is relatively narrow; when the price fluctuates , it becomes wider. It can be used strategically for trend following strategies, according to which a breakout to a new high is a buy signal and a breakout to a new low is a sell signal. This strategy is particularly effective in the case of clearly defined movements, while in cases in which the state of the market is not clear, the strategy is unprofitable.
Individual evidence
- ^ Donchian Channel. In: Dagobert-Dachs.com. Retrieved February 19, 2011 .