Donchian channels: the original breakout system
Donchian channels draw the highest high and lowest low of the last N periods, and the breakout of the channel is the turtle traders' original entry. It's simple, old and still relevant.
Do you use them?
- the period you run and the pairs you trade
- how you filter the raw breakouts
- the drawdown the system demands you accept
The trend lines guide covers the channel logic.
Background: Trend lines and price channels: how to draw them and read a break
A trend line connects rising lows or falling highs. This guide covers drawing trend lines consistently, adding a channel line, and what a break does and doesn't tell you.
How many points do you need to draw a trend line?
Two swing points define the line. A third touch that holds gives it more weight, because it shows other traders are reacting to the same line.
Should trend lines use wicks or candle bodies?
Either can work, as long as you use the same method every time and don't redraw the line to fit each new candle.
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