Donchian Breakout
A classic breakout system: buys when price makes a 20-day high and sells when it falls back below the midpoint.
Entry Logic
Buy when the close crosses above the 20-day Donchian upper channel (highest high of 20 days).
Exit Logic
Sell when the close falls below the 20-day middle line (midpoint of upper and lower).
How Rules Combine
Upper = max high of 20 days, Lower = min low of 20 days, Middle = (Upper+Lower)/2. A close above Upper is a new high breakout.
When It Works (Market Edge)
Strong trending breakouts that follow through: once price clears the long channel, it often continues.
When It Fails
Range tops: many highs are immediately rejected, so breakout entries get stopped at the middle line for a loss.
Common Myths
Myth: Every Donchian breakout is a new trend.
Truth: Most highs in a range are followed by reversals. Breakouts need volume or trend confirmation.
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