Donchian Channels plot the highest high and lowest low over 20 periods, with a midline average. Breakouts above/below the channel signal potential trend starts.
Parameters (20)
X-Axis: Time (candle intervals)
Y-Axis: Price (auto-scaled)
Upper: 20-period high (solid)
Middle: Average of upper & lower (dashed)
Lower: 20-period low (solid)
Interpretation
Bullish breakout: Break above the upper channel
Bearish breakout: Break below the lower channel
Consolidation: Narrow channel = low volatility
Wide channel = high volatility period
Trading Signals
Buy: new 20-period high (upper breakout)
Sell: new 20-period low (lower breakout)
Channel width = volatility
Price Overlay
Close Price: Actual closing price (same Y-axis, dashed violet)