Donchian Channels can be useful in visualizing the volatility of a market's price action. If the price is stable, the Donchian Channel will be relatively narrow. If the price has large fluctuations, the Donchian Channel will be wider.
Using the 20 day default period, a move above the channel signals a new 20 day high. Similarly, using a 20 week period, a move above the channel would signal a new 20 week high. Markets that continuously touch or exceed the upper channel line show strength, while conversely markets that continuously touch or break below the lower channel line show weakness.
Learn how Donchian Channels can improve your trading here.
Adam Hewison here, co-founder of MarketClub, with your 1 p.m. market update for Tuesday, the 14th of June.
Okay, here's what's happening right now in the major markets ...
SP 500: -60. This market remains in a broad trading range with resistance coming in beginning at 1296 and 1305 and finally 1315 which represents a 62% Fibonacci retracement. Major downside support is at 1250.
Join Adam as he covers several technical trading strategies including: the 52-week high on Friday rule, using Donchian Channels in a sideways market, using the "Trade Triangles" and MORE!
Whether you're looking to enhance your current strategy or implement a new one, this presentation will cover all bases. As always MarketClub's webinars are completely free, but registration is limited.
Over the past few weeks I’ve shown you video examples of how you can use three powerful, yet straightforward indicators – the Donchian Channel, Williams %R, and MarketClub’s Trade Triangles – in combination to quickly find and grab some not-too-shabby profits in sideways markets.
Today I’d like to take a closer look at one of them – the Donchian Channel – and how misusing it could sink your trading portfolio.