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Donchian Channel

Created by Richard Donchian. This indicator is a breakout system that traders use to follow the trend. And the area between the high and the low is the channel.

Example

Interpretation

When the Donchican Channel is narrow, then the price is stable.
When the Donchian Channel is wide, then that means a higher volatility and price fluctuates a lot.

A buy signal is given, when price rises above the Donchian Channel.

A sell signal is given, when the price rises below the Donchian Channel.

Calculation

calculated by taking the highest high and the lowest low of the last number of periods.

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