Donchian Channels
Also called: price channels
Bands plotting the highest high and lowest low over a lookback — a breakout above the upper channel is the classic trend-following entry.
Donchian Channels, named for Richard Donchian, draw the highest high and lowest low of the last N periods (commonly 20) as an upper and lower band, with a midline between. They make the range explicit: price riding the upper band is making new highs, the hallmark of a strong uptrend.
A close above the upper channel is a breakout buy — the rule at the heart of the famous Turtle Traders system — while the lower band serves as a trailing stop. The channel widens and narrows with volatility.
On StockSetups
StockSetups exposes a Donchian channel position field, so you can screen for names pushing the top of their range — a new N-day high — as confirmation alongside the detected pattern.
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