Donchian Channel
Donchian Channel plots the highest high and lowest low of the last N days, with the middle line at the midpoint.
What It Measures
Breakout levels and range boundaries: where price has not been in N days.
The Math (Simplified)
Upper = max high of last N days, Lower = min low of last N days, Middle = (Upper+Lower)/2.
Default Inputs & Tuning
20 days is standard (the original Turtle System used 20 and 55). Shorter = more breakouts, longer = fewer.
When It Works (Market Edge)
Trending breakouts: a close above the 20-day upper channel confirms new momentum; channel acts as dynamic support/resistance.
When It Fails
Sideways markets: price repeatedly pokes above/below the channel and immediately reverses, causing whipsaws.
Common Myths
Myth: A breakout above the Donchian upper always means continuation.
Truth: In ranges, breakouts fail more often than they trend. Volume or momentum confirmation reduces false signals.
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