Indicator Formula

Technical Details — Donchian Channels (DC)

Overview

The Donchian Channels calculation creates upper and lower bands around price.

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Mathematical Derivation

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Compact Formula Summary

See Donchian Channels formula for compact notation.

Defaults: Period = 20 bars

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Complete Calculation Example

See Donchian Channels documentation for worked examples.

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Key Takeaways from the Example

1. Band Width: Indicates volatility or range size
2. Band Touches: Signal potential reversals or breakouts

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Caution

Important: Band indicators work differently in trends vs ranges. In trends, band breaks are continuation signals. In ranges, they’re reversal signals. Always combine with trend context (ADX).