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Donchian Channel

The Donchian Channel is a very simple trend-following indicator developed by Richard Donchian. It plots the highest high and lowest low over the last n-periods time intervals.


www.cmsfx.com When the market is trending, signals can be derived from the Donchian Channel indicator based on the following basic rules:

1. When price closes above the Donchian Channel, buy long and cover short positions.
2. When price closes below the Donchian Channel, sell short and liquidate long positions.

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