DONCHIAN CHANNEL Trading Guide

The Donchian Channel is a quantitative technical analysis tool. Donchian Channel (Price Channel / Linear Regression Channel) Draws automatic channel based on highest high and lowest low over a period. Supports drawing the active channel only over the last N candles.

What does the indicator show?

• Market Structure & Momentum: Visualizes prevailing trend directions and key reversal zones.
• BUY / SELL Signals: Highlights confirmed entry and exit opportunities based on quantitative rules.
• Dynamic Boundaries: Provides adaptive levels for managing trade risk and reward expectations.

Key Settings

• Lookback Period (period): Controls the calculation period and sensitivity for market detection.
• Show Historical Lines (showHistory): Controls the calculation period and sensitivity for market detection.
• Show Breakout Signals (showSignals): Controls the calculation period and sensitivity for market detection.
• Slope Compare Lookback (compareLength): Controls the calculation period and sensitivity for market detection.
• Mirror Levels Lookback (targetLookback): Controls the calculation period and sensitivity for market detection.
• Upper Band (Resistance) (upperColor): Controls the calculation period and sensitivity for market detection.
• Lower Band (Support) (lowerColor): Controls the calculation period and sensitivity for market detection.
• Basis (Middle) (basisColor): Controls the calculation period and sensitivity for market detection.
• Mirror Upper Line (Green) (upperMirrorColor): Controls the calculation period and sensitivity for market detection.
• Mirror Lower Line (Red) (lowerMirrorColor): Controls the calculation period and sensitivity for market detection.
• Upper Band (upper): Controls the calculation period and sensitivity for market detection.
• Lower Band (lower): Controls the calculation period and sensitivity for market detection.
• Basis Band (basis): Controls the calculation period and sensitivity for market detection.
• Slope (%) (slope): Controls the calculation period and sensitivity for market detection.
• Angle (Deg) (angle): Controls the calculation period and sensitivity for market detection.
• Slope Change (slopeChange): Controls the calculation period and sensitivity for market detection.
• Mirror Upper (refHigh): Controls the calculation period and sensitivity for market detection.
• Mirror Lower (refLow): Controls the calculation period and sensitivity for market detection.
• Above Mirror Upper (isAboveRefHigh): Controls the calculation period and sensitivity for market detection.
• Below Mirror Lower (isBelowRefLow): Controls the calculation period and sensitivity for market detection.
• Angle Rising (isAngleRising): Controls the calculation period and sensitivity for market detection.
• Angle Falling (isAngleFalling): Controls the calculation period and sensitivity for market detection.
• Angle Flat (isAngleFlat): Controls the calculation period and sensitivity for market detection.
• Breakout UP (upBreak): Controls the calculation period and sensitivity for market detection.
• Breakout DN (dnBreak): Controls the calculation period and sensitivity for market detection.
• Upper Band (upper): Controls the calculation period and sensitivity for market detection.
• Lower Band (lower): Controls the calculation period and sensitivity for market detection.
• Basis Band (basis): Controls the calculation period and sensitivity for market detection.
• Channel Slope (%) (slope): Controls the calculation period and sensitivity for market detection.
• Channel Angle (Degrees) (angle): Controls the calculation period and sensitivity for market detection.
• Slope Change Direction (slopeChange): Controls the calculation period and sensitivity for market detection.
• Mirror Upper Level (refHigh): Controls the calculation period and sensitivity for market detection.
• Mirror Lower Level (refLow): Controls the calculation period and sensitivity for market detection.
• Close is Above Mirror Upper (isAboveRefHigh): Controls the calculation period and sensitivity for market detection.
• Close is Below Mirror Lower (isBelowRefLow): Controls the calculation period and sensitivity for market detection.
• Angle is Rising (isAngleRising): Controls the calculation period and sensitivity for market detection.
• Angle is Falling (isAngleFalling): Controls the calculation period and sensitivity for market detection.
• Angle is Flat (isAngleFlat): Controls the calculation period and sensitivity for market detection.
• Breaks Upper Band Up (upBreak): Controls the calculation period and sensitivity for market detection.
• Breaks Lower Band Down (dnBreak): Controls the calculation period and sensitivity for market detection.

How to use Strategy Parameters (Condition Source)

Within the Strategy Tester module, this indicator can be used both as a direct signal source and as a market-state filter.

1. Signal Events

• isAboveRefHigh - Above Mirror Upper event signal.
• isBelowRefLow - Below Mirror Lower event signal.
• isAngleRising - Angle Rising event signal.
• isAngleFalling - Angle Falling event signal.
• isAngleFlat - Angle Flat event signal.
• upBreak - Breakout UP event signal.
• dnBreak - Breakout DN event signal.
• isAboveRefHigh - Close is Above Mirror Upper event signal.
• isBelowRefLow - Close is Below Mirror Lower event signal.
• isAngleRising - Angle is Rising event signal.
• isAngleFalling - Angle is Falling event signal.
• isAngleFlat - Angle is Flat event signal.
• upBreak - Breaks Upper Band Up event signal.
• dnBreak - Breaks Lower Band Down event signal.

2. Filters and Trade Levels

• period - Lookback Period value used for structural qualification or thresholds.
• showHistory - Show Historical Lines value used for structural qualification or thresholds.
• showSignals - Show Breakout Signals value used for structural qualification or thresholds.
• compareLength - Slope Compare Lookback value used for structural qualification or thresholds.
• targetLookback - Mirror Levels Lookback value used for structural qualification or thresholds.
• upper - Upper Band value used for structural qualification or thresholds.
• lower - Lower Band value used for structural qualification or thresholds.
• basis - Basis Band value used for structural qualification or thresholds.
• slope - Slope (%) value used for structural qualification or thresholds.
• angle - Angle (Deg) value used for structural qualification or thresholds.
• slopeChange - Slope Change value used for structural qualification or thresholds.
• refHigh - Mirror Upper value used for structural qualification or thresholds.
• refLow - Mirror Lower value used for structural qualification or thresholds.
• upper - Upper Band value used for structural qualification or thresholds.
• lower - Lower Band value used for structural qualification or thresholds.
• basis - Basis Band value used for structural qualification or thresholds.
• slope - Channel Slope (%) value used for structural qualification or thresholds.
• angle - Channel Angle (Degrees) value used for structural qualification or thresholds.
• slopeChange - Slope Change Direction value used for structural qualification or thresholds.
• refHigh - Mirror Upper Level value used for structural qualification or thresholds.
• refLow - Mirror Lower Level value used for structural qualification or thresholds.

Strategy Example: Enter Long when buySignal is true and trendFilter == 1, ensuring trades align with dominant momentum.